Praise for Rivian Automotive Inc.’s better-than-expected quarterly results failed to boost the EV maker’s stock on Wednesday, with most analysts keeping their cautious view on the company and on the direction of the stock in the near term.
Rivian’s shares
RIVN,
dropped more than 9% on Wednesday, a day after the company reported second-quarter results that topped Wall Street views and raised its production guidance for the year to 52,000 vehicles, from 50,000.
The stock was on track to end at its lowest in a little over a month, and poised for its steeper one-day percentage decline since March 7, when it fell more than 14%.
“We’re torn,” Alex Potter at Piper Sandler said in his note.
It was a “good” quarter, but the upside potential for the stock is tempered by capital burden, Potter said, keeping his rating on Rivian shares at the equivalent of hold.
“We cannot deny: Rivian has begun building credibility, and we’re still big believers in the product, the brand, and the strategy (which mimics Tesla’s approach to vertical integration),” Potter said. “We’re boosting our target to $22, up from $14, but questions remain. We’re still neutral.”
Piper Sandler’s price target implied downside of about 3% compared to Wednesday’s share price.
Rivian showed the Street that its “methodical approach to cost reduction” is showing results, said Truist analyst Jordan Levy, who praised Rivian’s in-house integration, but kept his $30 price target and buy rating on the stock unchanged.
Michael Shlisky at DA Davidson also raised his price target on Rivian’s shares — to $25 from $18 — but stopped short of raising his hold rating on the stock.
Rivian’s recent deal to buy Swedish mapping company Iternio, developer of an app called A Better Routeplanner, is underappreciated, Shlisky said.
The acquisition “does not get enough attention but could be a significant factor in [Rivian’s] growth,” the analyst said. But soon after Shlisky struck a cautious tone on Rivian as well.
“We’re still not 100% sold, as new EV SUVs and pickup trucks seem to be entering the market monthly,” including General Motors Co.’s Cadillac Escalade IQ. Execution risks remain, “but things seem to be heading in the right direction.”
Shares of Rivian had been on a tear, particularly since the company reported much-better-than-expected quarterly deliveries and production in early July.
The stock has gained more than 60% in the last three months, which compares with an advance of about 9% for the S&P 500 index
SPX
in the same period. Rivian’s outperformance holds in the year to date, but it’s less pronounced. The stock is up 23%, against a 16% gain for the index.
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