Wedbush analyst Daniel Ives raised his price target for Tesla (TSLA) to $370 from $270 while keeping a Neutral rating on the shares.

The stock closed Tuesday up $6.03 to $425.25. "Strong" Model 3 consumer demand and profitability "that looks to be on an upward trajectory" for the December quarter has proven the skeptics wrong in the near-term, Ives tells investors in a research note.

For Q4, both U.S. consumer demand for Model 3 and European strength should likely drive upside and enable Tesla to "comfortably" hit its vehicle delivery guidance of 360,000-400,000 units for fiscal 2019, says the analyst. He believes that while part of the recent share rally has been a "massive short-covering," it has also been driven by underlying fundamental improvement. Ives values the Tesla "Bear case" at $200-$220 per share and the "Bull case" at $580-$600 per share.

However, he's still taking a "wait and see approach to see how sustainable this level of demand/profitability is going forward" before becoming more constructive on Tesla shares.