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On Monday, Mizuho Securities adjusted its outlook for Rivian (NASDAQ:RIVN) Automotive Inc (NASDAQ:RIVN) shares, reducing the electric vehicle manufacturer's price target from $15.00 to $12.00 while maintaining a Neutral rating. The adjustment comes amid a broader reassessment of the electric vehicle (EV) sector's demand prospects.
Rivian's September quarter production and delivery figures were announced, revealing that the company produced approximately 13,000 units and delivered 10,000. Despite this, Rivian has revised its full-year production forecast down to roughly 48,000 units due to what is believed to be internal supply constraints of its Enduro motor. Nevertheless, the company has kept its delivery guidance, expecting a low single-digit percentage increase year over year.
The firm's analyst noted concerns for the second half of 2024 and into 2025, suggesting that Rivian's projected production schedule for 2025, which implies about 71,000 units, might not align with the consensus delivery expectations of approximately 59,000 units. This discrepancy points to potential challenges in meeting these delivery targets given the possibility of production shutdowns and a softening in demand.
While acknowledging Rivian's strong product roadmap, which includes the lower-cost R2 model expected in the first half of 2026, and the improved balance sheet due to the Volkswagen (ETR:VOWG_p) deal that reduces liquidity risk, the firm remains cautious. The sentiment is that the U.S. EV market may face softer demand going forward.
Rivian is scheduled to report its earnings on November 7, which will provide further insight into the company's financial health and its ability to navigate the anticipated challenges in the EV market.
In other recent news, Rivian Automotive has entered into a 15-year power purchase agreement with RWE AG (OTC:RWEOY), a German energy company, to supply clean electricity from a wind farm in Texas. The Champion Wind project, expected to resume operations in mid-2025, will contribute to Rivian's goal of enabling 7 billion miles of renewable driving.
Analysts from firms such as Barclays, DA Davidson, and Deutsche Bank have maintained their respective ratings on Rivian, despite uncertainties surrounding production and supply chain dynamics. Rivian's third-quarter revenue estimate has been set at $867 million, with a full-year delivery forecast of approximately 51,000 units.
Goldman Sachs also maintained a Neutral rating on Rivian, noting lower-than-expected vehicle deliveries and production numbers for the third quarter of 2024. The company revised its 2024 production forecast to between 47,000 and 49,000 vehicles, due to ongoing supply chain constraints.
Despite these challenges, Rivian reaffirmed its delivery guidance, expecting a low single-digit year-over-year growth. These developments are part of Rivian's ongoing efforts to navigate a competitive automotive industry.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Rivian's financial situation and market performance. The company's market capitalization stands at $10.26 billion, reflecting its position as a significant player in the EV market despite recent challenges. Rivian's revenue for the last twelve months as of Q2 2023 reached $5.014 billion, with an impressive year-over-year growth of 68.2%. However, this growth comes with substantial costs, as evidenced by the negative gross profit of $2.06 billion and an operating income margin of -117.27% for the same period.
InvestingPro Tips highlight some key concerns for investors. Rivian is "quickly burning through cash" and "suffers from weak gross profit margins," which aligns with the article's discussion of production challenges and potential demand softening. Additionally, the tip that "analysts do not anticipate the company will be profitable this year" underscores the financial hurdles Rivian faces as it scales production.
These insights complement the article's analysis of Rivian's production targets and market expectations. Investors seeking a more comprehensive understanding of Rivian's prospects can access 11 additional InvestingPro Tips, offering a deeper dive into the company's financial health and market position.
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