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Piper Sandler analyst Alexander Potter raised the firm's price target on Tesla (TSLA) to $1,200 from $515 and keeps an Overweight rating on the shares.

2020 was a breakout year for Tesla, but the "fireworks aren't over," Potter tells investors in a research note. Even after a 10-times return over the past 12 months, investors should not be selling this stock, says the analyst. Potter's forecast for Tesla now implies 894,000 vehicle deliveries in 2021, eventually ramping to 9M-plus units in 2030. That this level of production would rank Tesla among the top-three automakers globally, he points out. More important, the company will see a steady ramp in full self-driving software adoption starting in 2030, with 50%-plus of all Tesla owners using the full self-driving package by the end of the 20-year forecast period, Potter adds. He believes this should have a big impact on margins, with Tesla's EBIT margin eventually exceeding 40%.

Further, by the 2030s, Potter expects Tesla Energy to represent 20%-30% of revenue versus 6% today. Taken together, these changes drive his discounted cash flow-based price target up to $1,200. Tesla is targeting "multi-trillion-dollar markets" so there "will always be new levers for growth," according to the analyst.