Needham raises Rivian stock price target to $17, maintains Buy rating

On Friday, Needham analysts increased their price target for Rivian Automotive Inc (NASDAQ:RIVN) shares to $17.00, up from the previous target of $14.00, while reiterating a Buy rating on the stock. The adjustment follows Rivian’s fourth-quarter results and the company’s recent commentary. Currently trading at $13.61 with a market capitalization of $14.32 billion, InvestingPro analysis suggests the stock is fairly valued based on its proprietary Fair Value model.

The analysts at Needham highlighted Rivian’s potential as a long-term contender in the transition from internal combustion engines (ICE) to electric vehicles (EVs). This optimism is based on customer satisfaction and enthusiasm, particularly in anticipation of the upcoming R2 vehicle, which is expected to be more affordable and expand the total addressable market (TAM). InvestingPro data reveals that Rivian holds more cash than debt on its balance sheet, supporting its financial stability. Additionally, the partnership with Volkswagen (ETR:VOWG_p) has contributed to Rivian’s robust financial position.

Despite a slow start to the year as indicated in first-quarter messaging, Needham analysts underscored stronger-than-anticipated gross margins reported in the fourth quarter. According to InvestingPro data, Rivian’s gross profit margin stands at -24.14%, with annual revenue reaching $4.97 billion. They acknowledged that while some may focus on the cautious delivery guidance for 2025 and the sluggish beginning of the year, the firm views these issues as temporary, with Rivian working towards scaling up its annual production.

The new price target of $17 is based on 15 times the forecasted adjusted EBITDA for fiscal year 2028, discounted back to present value. Needham’s analysts emphasized their long-term perspective and Rivian’s strong balance sheet as reasons for maintaining patience amidst the current volatility facing automotive original equipment manufacturers (OEMs). The analysts’ statement concluded with an affirmation of their belief in Rivian’s future prospects, despite short-term challenges in the market. For deeper insights into Rivian’s financial health, valuation metrics, and expert analysis, access the comprehensive Pro Research Report available exclusively on InvestingPro.

In other recent news, Rivian Automotive Inc reported a 32% increase in revenue for the fourth quarter, reaching $1.73 billion, which surpassed analyst expectations by $300 million. The company also achieved its first quarter of positive gross margin, approximately 10%, aided by regulatory credit benefits. However, Rivian’s guidance for 2025 forecasts a decrease in full-year deliveries to around 48,500 units, a 6% drop from the previous year, which is below the consensus estimate of approximately 54,900 units. Analysts have responded with mixed ratings: Mizuho (NYSE:MFG) raised its price target to $13 while maintaining a Neutral rating, and Cantor Fitzgerald downgraded the stock to Neutral but increased the target to $15. Meanwhile, Goldman Sachs maintained a Neutral stance with a $14 target, highlighting improvements in supply chain efficiency and cost reductions. CFRA increased its price target to $10 but kept a Sell rating, noting Rivian’s adjusted EPS loss of $0.46, which was better than expected. Rivian’s expansion plans include making its RCV sales available to all buyers and adding 30 new service locations by 2025. The company also plans to start production of its R2 model in 2026, with delivery estimates varying among analysts.

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