Most analysts still rate Rivian shares Buy, despite the stock’s recent decline.
Courtesy Rivian
Analysts are adjusting their price targets for Rivian Automotive stock to reflect its extended losses over the past few months.
On Thursday, Mizuho analyst Vijay Rakesh cut his Rivian (ticker: RIVN) price target by $5 to $95 a share, but maintained his Buy rating on Rivian stock.
The stock was slipping again Thursday, down 1.2% to $45.34 in morning trading. The S&P 500 and Dow Jones Industrial Average are up about 0.3% and 0.4%, respectively.
Rakesh’s action mirrors the rest of Wall Street. Analysts like the stock, but have been cutting target prices. Almost 70% of analysts covering the company rate shares Buy. The average Buy-rating ratio for stocks in the S&P 500 is about 58%.
However, the average analyst price target is now about $82 a share, down about 40% from an average of about $135 shortly after the Rivian IPO.
In this case, Wall Street seems to be following investors as the stock continues its rocky road downward. Rivian shares have slid about 74% from their all-time high of more than $179. Coming into Thursday trading, shares were down about 56% year to date.
A slow production ramp is partly to blame for stock weakness—and for Rakesh’s lowered price target. Rivian expects to ship about 25,000 vehicles in 2022. At the start of the year, analysts were hoping that number would be closer to 40,000.
Rising interest rates and inflation also haven’t helped Rivian stock, or shares of other growth companies. Higher rates hurt growth stock valuations more than others because growth companies earn most of their income far in the future. That income is worth less in today’s dollars as valuation discount rates, which are tied to interest rates, rise.
The average $82 price target still implies gains of almost 80% from recent levels, compared with a 13% average gain implied by average target prices for a stock in the S&P 500.
Rakesh’s price target, meanwhile, implies gains of more than 100%. He is still optimistic about the future, writing he expects “robust pickup Truck/SUV portfolio ramps along twin Consumer/Commercial roadmaps.” Rivian makes passenger trucks and SUVs as well as commercial vans. Amazon.com (AMZN) has ordered 100,000 of the all-electric delivery vehicles.
Rakesh projects 88,000 vehicle deliveries in 2023, up from his estimated 23,000-plus deliveries in 2022.
Write to Al Root at [email protected]
