RBC Analyst on Rivian: “We view current levels as an attractive entry point for long-term holders”

Written by Cláudio Afonso | info@claudio-afonso.com

RBC analyst Joseph Spak released this Wednesday a client note on Rivian where he expects a stronger Q1 2022 deliveries than the consensus. The analyst expects the company to reach a weekly production of 320 units in Q1 2022, which means 2,3700 vehicles produced during the quarter. as of 13:37 EST, Rivian shares are trading at $54.05 being 47.87% down year-to-date.

“We note that Visible Alpha consensus 1Q22 deliveries is 1.5k (but based on only 7 inputs). We forecast 1Q22 production is closer to the 2.4k level but assume that ~1 week of production is in transit,” Spak added.

“The bar has been reset, we continue to have faith in management, the product, the business plan and the go-to-market strategy. We also believe Rivian is thinking thoughtfully about the entire value chain and how that needs to evolve (down and upstream). The near-term risk is supply chain, but we believe management contemplated the risks in their revised outlook. We view current levels as an attractive entry point for long-term holders. Tactically, as shown above, we may start to get more positive data points. Hitting near-term expectations can lead investors to gain more confidence in outer-year potential. And the valuation looks relatively attractive with an interesting risk/reward.” — the analyst added.


Earlier this month, Mizuho Securities analyst Vijay Rakesh cut Rivian’s price target by $5 to $95 a share while teiterating his Buy rating on the stock. The downgrade comes two weeks after the analyst lowers his Rivian price target from $145 to $100. The new price target represents an upside potential of 107% based on Wednesday closing price at $45.87 per share. Rivian shares have an average rating of outperform and price targets ranging from $40 to $147, according to analysts polled by Capital IQ.

Recently, the company reported Q4 and Full Year 2021 Earnings missing Wall Street’s expectations. The company lowered its production guidance for 2022 and expects now to deliver 25,000 vehicles (down from 40,000). After being down 6.35% during the trading session, the stock dropped nearly 13% After-Hours to $35.93 per share.

As of March 8th, Rivian had 83,000 R1 net preorders in the U.S. and Canada and 100,000 EDV units reserved from Amazon and counts 11,500+ employees. The company has been facing a number of challenges, from production ramp-up to orders cancelled after increasing its prices by 17% and 20%. Rivian announced that has raised the price of its R1T pickup by 17% and R1S SUV by about 20%. Increases in the cost of raw materials, inflationary pressure and the already known chip shortage issue are the reasons for this price increase.

Written by Cláudio Afonso | info@claudio-afonso.com