Shares of Tesla (TSLA) are on the rise on Thursday after the electric carmaker reported better than expected third quarter results. This is Tesla's fifth consecutive quarter of profit. Following the earnings release, both Baird analyst Ben Kallo and JMP Securities analyst Joseph Osha upgraded the stock to Outperform, with the former calling it a "must own" for those looking for exposure to ESG, sustainability, and disruptive technology.

QUARTERLY RESULTS: On Wednesday after market close, Tesla reported third quarter non-GAAP earnings per share of 76c and revenue of $8.77B, both above consensus of 56c and $8.26B, respectively. The company said that, "We have the capacity installed to produce and deliver 500,000 vehicles this year. While achieving this goal has become more difficult, delivering half a million vehicles in 2020 remains our target. Achieving this target depends primarily on quarter over quarter increases in Model Y and Shanghai production, as well as further improvements in logistics and delivery efficiency at higher volume levels."

Tesla also noted that for the trailing 12 months, it achieved an operating margin of 6.3%. "We expect our operating margin will continue to grow over time, ultimately reaching industry-leading levels with capacity expansion and localization plans underway. We are currently building Model Y capacity at Gigafactory Shanghai, Gigafactory Berlin and Gigafactory Texas, and remain on track to start deliveries from each location in 2021. Tesla Semi deliveries will also begin in 2021. We continue to significantly invest in our product roadmap," Tesla stated.

'MUST OWN' TESLA: Following the company's quarterly results, Baird analyst Ben Kallo upgraded Tesla to Outperform from Neutral with a price target of $488, up from $450. While he acknowledged having been too early in his previous downgrade of the stock in January, Kallo argued that "it is not too late for us to join the party." The company's competitive moat is substantial and growing and he thinks it is unlikely traditional automakers will be able to effectively compete with Tesla over time. Kallo views the stock as a "must own" for those looking for exposure to ESG, sustainability, and disruptive technology.

JMP Securities analyst Joseph Osha also upgraded Tesla to Outperform from Market Perform with a $516 price target after its third quarter results. The analyst noted that the company's revenues were close to his estimates and its automotive gross margins were "notably strong." Osha also pointed to the positive commentary from Tesla CEO Elon Musk about 2021, who indicated that the company should be able to sell "everything it is able to make" next year, implying deliveries of 850K-900K autos. Additionally, the analyst raised his fiscal year 2021 delivery target to 841K from 757K vehicles.

Also calling the shares "must own," Piper Sandler analyst Alexander Potter reiterated an Overweight rating on Tesla with a $515 price target. With every passing quarter, Tesla's financial condition improves further, the analyst contended, adding that operating margins are expanding toward double-digits, and the balance sheet has been "substantially de-risked."

Commenting on the quarterly results, Wedbush analyst Daniel Ives said he views Tesla's quarter as "another major step forward" in the company's ramp around Model 3 deliveries as well as profitability heading into 2021. The analyst noted that the company delivered Street upside across the board with "impressive" gross margin, which speaks to the manufacturing efficiency and success Tesla is seeing especially out of China with Giga 3 front and center leading the way. Ives raised his bull case from $700 to $800 to reflect improving demand/profitability dynamics heading into 2021 for Tesla despite a soft macro and COVID backdrop. He kept a Neutral rating and a $500 price target on the shares.

BUSINESS MODEL 'NOT SUSTAINABLE': Bearish on Tesla despite the company's third quarter results, GLJ Research analyst Gordon Johnson kept a Sell rating on the shares with a $40 price target. The analyst argued that "cuttings prices to sell cars at a loss is not a sustainable business model." Tesla's GAAP net income was negative when excluding one-time taxpayer funded credit sales for the fourth consecutive quarter, the analyst contended, adding he believes that as Tesla cuts prices further, investors may begin to "run for the hills."

PRICE ACTION: In late morning trading, shares of Tesla have gained almost 3% to $433.82.