Rivian stock rating cut, price target lowered to $10 by BofA

Monday, Rivian Automotive Inc (NASDAQ:RIVN) received a downgrade in its stock rating from Neutral to Underperform by BofA Securities, accompanied by a reduction in its price target from $13.00 to $10.00. The move comes as the analyst expressed concerns over the electric vehicle (EV) manufacturer’s future performance and market conditions. According to InvestingPro data, Rivian’s stock has declined over 7% in the past week, with five analysts recently revising their earnings expectations downward for the upcoming period.

The analyst cited several reasons for the downgrade, including a less optimistic outlook for 2025 than previously anticipated, and complexities arising from Rivian’s partnership with Volkswagen (ETR:VOWG_p), which could affect earnings predictions for the coming four years. Additionally, Rivian is expected to face heightened competition as new SUV and CUV models are projected to enter the EV market in 2026 and 2027. InvestingPro analysis reveals concerning fundamentals, with a gross profit margin of -20.26% and rapid cash burn, though the company maintains more cash than debt on its balance sheet.

Another factor influencing the downgrade is a slowdown in EV demand, which may not see an improvement in the near term. The analyst also mentioned potential changes in US government policies that could impact EV incentives. There is a particular concern regarding Rivian’s $6.6 billion Department of Energy loan, which was secured under the Biden Administration on January 16, 2025, given the current administration’s focus on cost reduction.

Rivian, considered one of the more promising startups in the EV sector, has been working towards achieving sustainably positive gross margins. Despite this progress, the combination of a challenging outlook and potential policy shifts has led to a more cautious stance from BofA Securities regarding the company’s stock.

In other recent news, Rivian Automotive Inc reported fourth-quarter revenue of $1.7 billion, surpassing expectations set by Benchmark analysts and the consensus. The company achieved a gross profit of $170 million, which translates to a 10% margin, marking its first quarter of positive gross margin aided by regulatory credit benefits. Needham analysts raised their price target for Rivian to $17, citing stronger-than-expected gross margins and customer enthusiasm for the upcoming R2 model. Meanwhile, Mizuho (NYSE:MFG) Securities increased their price target to $13, noting improved profitability and a slight year-over-year increase in vehicle deliveries. Cantor Fitzgerald downgraded Rivian from Overweight to Neutral but raised the price target to $15, reflecting a more cautious outlook on future performance. The firm adjusted its delivery forecasts for 2025 and 2026, citing Rivian’s own guidance. Goldman Sachs maintained a Neutral rating with a $14 price target, highlighting a significant decrease in the cost of goods sold per vehicle and improvements in supply chain efficiency. Analysts from multiple firms expressed optimism about Rivian’s long-term prospects, despite short-term challenges and cautious delivery guidance.

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