Guggenheim cuts Rivian stock price target to $16, maintains Buy rating

On Monday, Guggenheim Securities adjusted its outlook on Rivian Automotive Inc (NASDAQ:RIVN), reducing the electric vehicle manufacturer’s price target to $16 from the previous $18, while continuing to endorse the stock with a Buy rating. The modification follows Rivian’s fourth-quarter financial results, which demonstrated the company’s success in achieving its gross profit goals and surpassing consensus expectations. According to InvestingPro data, Rivian maintains a strong liquidity position with a current ratio of 4.7 and holds more cash than debt on its balance sheet, though the company faces challenges with negative gross margins of -20.26%.Want deeper insights? InvestingPro subscribers have access to 12 additional key tips about Rivian’s financial health and market position.

The report provided a mixed bag of insights that could fuel both positive and negative sentiments among investors. Guggenheim noted that Rivian’s fourth-quarter gross profit not only met the company’s targets but also exceeded the levels required for milestone-related payments. With revenue growing at 12.09% over the last twelve months to $4.97 billion, the company shows promise despite current challenges. Additionally, the analyst pointed out that the Bill of Materials (BOM) cost commentary was constructive and should support the cost structure of Rivian’s upcoming R2 model. The R2 is also expected to benefit from significantly lower per-unit non-BOM costs compared to the R1.

Another positive development highlighted was the beginning of benefits from Rivian’s joint venture with Volkswagen (ETR:VOWG_p), as well as the company’s move to break out software and services revenue. Moreover, details regarding Rivian’s autonomous driving technology were deemed encouraging by the analyst.

Despite these positive factors, there were concerns raised regarding Rivian’s guidance for fiscal year 2025, which was perceived as conservative compared to consensus expectations. The guidance suggests that vehicle deliveries may decline from 2025 figures. The report also mentioned uncertainty regarding the exact expectations and potential headwinds from the Inflation Reduction Act (IRA) in the company’s guidance.

The first-quarter guidance indicates that Rivian will need a significant ramp-up in deliveries beyond the first quarter to meet its targets. Upcoming events that could influence the stock include CEO RJ Scaringe’s presentation at the NVIDIA (NASDAQ:NVDA) GTC in March, which could have a positive impact, and the potential negative effect of the removal of IRA leasing subsidies.

Guggenheim’s decision to lower the price target reflects the exclusion of the R1 platform from its sum-of-the-parts valuation and a reduced implied Discounted Cash Flow (DCF) value. Despite the reduced price target, the firm’s Buy rating indicates a continued optimistic view of Rivian’s long-term potential.

In other recent news, Rivian Automotive Inc has seen varied reactions from analysts following its latest financial performance and strategic developments. Rivian’s fourth-quarter revenue surpassed expectations, generating $1.7 billion compared to the $1.5 billion consensus, with a gross profit margin of 10%. Analysts at Benchmark maintained a Buy rating with an $18 price target, citing optimism for Rivian’s path to profitability and the upcoming R2 model launch. Needham also raised its price target to $17, emphasizing Rivian’s potential in the EV market and robust financial position due to its partnership with Volkswagen.

However, BofA Securities downgraded Rivian’s stock from Neutral to Underperform, lowering the price target to $10. The downgrade was attributed to concerns over future performance, competition, and potential policy changes affecting EV incentives. Mizuho (NYSE:MFG) Securities, while keeping a Neutral rating, increased the price target to $13, acknowledging improved profitability and a slight increase in vehicle deliveries. DA Davidson also adjusted its price target to $13, maintaining a Neutral rating, and noted Rivian’s efforts in marketing and exploring non-vehicle revenue streams.

Rivian’s guidance for 2025 suggests a decrease in full-year deliveries to around 48,500 units, which is lower than consensus estimates. The company plans to expand its service footprint with 30 new service locations in 2025 and aims to start production of the R2 model in 2026. These strategic moves are being closely monitored by investors as Rivian navigates a competitive and evolving electric vehicle market.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.