Electric-car maker Rivian went public on the Nasdaq in November.
Courtesy of Rivian
Wall Street is sticking with its Buy call for Rivian stock.
Mizuho analyst Vijay Rakesh says that current prices were a “good entry point” for Rivian (ticker: RIVN) stock. He hosted Rivian CFO Claire McDonough at an event his brokerage hosted.
Rakesh came away from his meeting believing that production is improving and a second shift will be added to Rivian’s Normal, Illinois, plant in the second half of the year. More shifts, of course, will boost production.
Rivian plans to deliver about 25,000 vehicles in 2022. About 8,000 of those should be delivery vans going to Amazon.com (AMZN). Rivian didn’t immediately respond to a request for comment about the mix of the 25,000 vehicles.
Rakesh’s price target for Rivian stock is $80 a share, up almost 140% from Friday’s close of $30.96. He rates shares Buy.
He isn’t alone in his bullish views. Overall, about 65% of analysts covering the stock rate shares Buy. The average Buy-rating ratio for stocks in the S&P 500 is about 58%. The average analyst price target, however, is lower at about $54 a share. Still, that is up almost 75% from recent levels.
By that math, Rivian stock looks more attractive than when analysts first launched coverage. Back in December, shortly after Rivian’s initial public offering, about 64% of analysts rated shares Buy and the average analyst price target was about $134 a share. That was only about 10% higher than the $122 price.
Since then, shares have been badly beaten up, falling about 75%. The Nasdaq Composite is down about 25% over the same span.
Rising interest rates and inflation have sapped investor willingness to hold stock in start-up companies. That is part of the reason for the decline. Rivian has also run into some production ramp-up challenges. Back in December, Wall Street was hoping for more like 40,000 deliveries in 2022. That was before Rivian’s guidance for 25,000 units.
Rivian’s rating remains more positive than Tesla (TSLA). Half of the analysts covering Tesla stock rate shares Buy. The average analyst price target is about $942 a share, up about 24% from recent levels.
Tesla is trading at roughly 6.8 times estimated 2023 sales. Rivian trades for about 4.6 times that amount. Sales are one thing, earnings are another. Rivian isn’t profitable yet. Tesla has been consistently profitable since mid-2019.
The bullish call might be helping shares Tuesday. Rivian stock is up about 1.7% in early trading. S&P 500 and Dow Jones Industrial Average futures are both down about 0.6%.
Write to Al Root at [email protected]
