Written by Cláudio Afonso | LinkedIn | X
On Wednesday morning, following Rivian’s second-quarter earnings report, UBS, Wells Fargo, and Needham lowered their price targets for the shares of the Irvine-based electric vehicle maker.
UBS analyst Joseph Spak lowered his price target for Rivian from $17.00 to $16.00, while maintaining a Neutral rating.
Wells Fargo analyst Colin Langan also reduced his price target from $18.00 to $15.00, keeping an Equal Weight rating.
Langan noted that Rivian’s Q2 adjusted EBITDA was in line with consensus expectations, and the management maintained its FY24 guidance. However, he expressed concerns over pricing, which could impact Rivian’s ability to meet its Q4 gross margin breakeven target.
Needham analyst Chris Pierce lowered his price target for Rivian from $20.00 to $18.00, maintaining a Buy rating. Pierce reiterated his positive outlook on Rivian, viewing it as a long-term winner in the transition from internal combustion engine (ICE) vehicles to electric vehicles (EVs).
He highlighted high customer satisfaction among R1 owners, the strategic partnership with Amazon for delivery vans, and recent investments and partnerships with Volkswagen as key drivers of future demand. Pierce also mentioned continued manufacturing efficiencies and supplier leverage as factors driving down the cost of goods sold (COGS) per vehicle.
He added that the forthcoming R2 and R3 vehicles are expected to drive significant unit growth, although near-term growth may be muted due to uncertainties around R1 demand.
Consensus delivery estimates might need adjustment following Rivian’s reaffirmation of its 2024 delivery growth and planned 2025 capacity for the R1 and EDV lines. Pierce’s $18 price target is based on 20 times his estimated 2028 adjusted EBITDA, discounted back to present value.
Rivian CFO Claire McDonough, revealed during the earnings conference call late Tuesday the company will do a second pause in Normal one year from now to prepare for the mass production of the cheaper, smaller R2 model.
Rivian reported $1.16 billion of revenue while negative gross profit increased year over year to $451 million from $412 million. The company expects to reach “modest gross profit” by the last quarter of the year.
In a statement, Rivian said that the losses increased due to a lower average selling price, purchase commitments, among other reasons.Earlier this week, Rivian has begun deploying its latest over-the-air (OTA) software update, version 2024.27, for the second-generation R1 models (R1S and R1T).
The update brings access to new apps such as Apple Music and Audible, a 60-Day Trial of Connect+ and several enhancements.
Written by Cláudio Afonso | LinkedIn | X
