Is this U.S.-China selloff a buy? A top Wall Street voice weighs in
On Monday, Stifel analysts demonstrated confidence in Rivian Automotive Inc (NASDAQ:RIVN) by increasing the company’s price target from $16.00 to $18.00 while maintaining a Buy rating on the stock. The revision comes amid the firm’s belief in Rivian’s progress towards achieving significant milestones. According to InvestingPro data, Rivian’s stock has shown strong momentum with a 34.78% return over the past six months, while analyst targets range from $6.10 to $23.00. Stifel’s assessment hinges on the expectation that Rivian will deliver a positive gross profit in the first quarter of 2025 and the fourth quarter of 2024. Additionally, the company is on track to meet its target of a positive gross profit for the year 2025. Currently, InvestingPro data shows the company’s gross profit margin stands at -9.33%, though nine analysts have revised their earnings estimates upward for the upcoming period.
Rivian’s efforts to reduce costs and the upcoming launch of the R2, a critical model in its lineup, were cited as key factors reinforcing Stifel’s positive outlook. Analysts at Stifel have also taken into account Rivian’s current liquidity position. They believe that the automaker has adequate funds to support its operations through the R2’s launch, bolstered by a robust balance sheet and external investments from entities such as Volkswagen (ETR:VOWG_p) and the Department of Energy (DOE) loan. This assessment aligns with InvestingPro data showing a strong current ratio of 3.73, indicating the company’s liquid assets well exceed its short-term obligations. Get access to 10+ additional ProTips and comprehensive financial analysis through InvestingPro’s detailed research reports.
These investments are anticipated to provide Rivian with sufficient capital to facilitate the ramp-up of its midsize platform in Georgia. Stifel’s reassurance of the Buy rating and the adjusted price target are based on a Discounted Cash Flow (DCF) analysis. This suggests that despite near-term challenges, Rivian’s long-term narrative remains promising and supports the investment firm’s optimistic stance on the company’s stock. Based on InvestingPro’s Fair Value analysis, Rivian is currently trading near its Fair Value, with a Financial Health Score of 2.28 (FAIR).
In other recent news, Rivian Automotive Inc has reported several significant developments impacting its financial outlook and stock evaluations. The company has secured a $1 billion investment from Volkswagen, expected to be received by the end of the second quarter, marking a major milestone following its second consecutive quarter of gross profit. Rivian’s first-quarter earnings for 2025 exceeded expectations, with revenue reaching $1,240 million, surpassing estimates from both JPMorgan and Bloomberg. However, Rivian has revised its full-year delivery forecast downward to between 40,000 and 46,000 vehicles, a decrease from the previous estimate, due to customer uncertainties and increased tariff costs.
Analyst firms have responded to these updates with varying assessments. DA Davidson raised its price target for Rivian to $15 while maintaining a Neutral rating, acknowledging the mixed results of the quarter. Similarly, UBS increased its price target to $13, citing improvements in cost of goods sold and the Volkswagen investment as positive factors. TD Cowen also adjusted its price target to $14, recognizing Rivian’s progress in gross margins but expressing a cautious outlook on the company’s near-term prospects. Conversely, JPMorgan maintained an Underweight rating with a $10 target, highlighting concerns over the revised delivery outlook and potential regulatory challenges.
Rivian’s financial strategy includes an increased capital expenditure forecast for FY25, ranging from $1,800 million to $1,900 million, up from previous estimates. Despite the lowered delivery guidance, the company has confirmed its adjusted EBITDA range for FY25, indicating resilience in its financial planning. Analysts have noted that Rivian’s stock performance may be influenced by the success of its upcoming R2 model and potential regulatory changes affecting the electric vehicle market.
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