Baird reiterated an Outperform rating and $30.00 price target on Rivian Automotive (NASDAQ:RIVN) while also designated the electric car maker as a “Best Idea for 2024” as they believe the company is positioned for a strong year with several potential catalysts.
“Production improvements, the use of inhouse developed components, and streamlining supply chain relationships are levers for margin upside, and we expect RIVN to flip to gross margin positive in Q424.” Wrote Baird analysts in a note.
Baird predicts that Rivian will flip to positive gross margins on its EDV and R1 platforms in 2024 by using more of its own parts, improving supply chains, and increasing production size.
Baird expects Rivian to report Q4 deliveries of ~14.6K, slightly ahead of the consensus estimate of ~14K, implying ~36% Y/Y growth. Baird also expects Rivian will have a strong 1Q24 with ~19.5K deliveries as production continues to improve.
The Normal facility will close for about three weeks in the middle of 2024 to reassess its production capabilities. During the 2Q shutdown, subsequent capacity 3Q ramp-up, Baird anticipates that production will increase to around 85,000 R1 units and 65,000 EDV units when running at maximum capacity, compared to the current output of 65,000 R1 and 85,000 EDV units, respectively.
Baird expects a gradual decrease in deliveries during Q2 followed by a slight improvement in Q3. Management has been discussing the impact of the factory's downtime for several quarters.
RIVN plans to open its Georgia plant in early 2024. Construction will start soon after the opening. Once completed, the facility will produce around 400,000 units per year and will be where R2 production begins, estimated to start in early 2026.
Shares of RIVN are up 0.29% in pre-market trading on Thursday.