Rivian stock has strong upside potential, analysts say

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Rivian (SHORE) investors desperately needed good news, and they finally got it on Wednesday. The struggling electric truck startup announced second-quarter vehicle production and delivery numbers, and they were better than expected.

The company said 4,467 vehicles were delivered during the quarter while 4,401 vehicles were manufactured. Consensus expected deliveries to come in at 3,500.

Adding extra brilliance, Rivian also said it remains on track to hit its production target of 25,000 in 2022.

The strong showing didn’t surprise RBC analyst Joseph Spak as much, who said the results should “boost investor confidence in 2022 targets.”

“Recall that we forecasted that we had high confidence in delivery expectations and believed there could be an upside,” the analyst continued. “Our RBC Elements™ work showed that production at the Rivian Normal IL plant was likely improving, and it is.”

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Rivian faced a host of issues earlier this year, ranging from chip shortages to covid-related headwinds, while vehicle lines have also been revamped. All impacted production, but also soured investors.

But clearly, investors were pleased that the company was able to maintain its annual production target despite these difficulties. This was reflected in the 18% rise in the share price over the past two trading sessions.

So far this year, Rivian has made 6,954 vehicles, suggesting that for the rest of the year, it will need to make ~18,000 or ~687/week to hit its target.

“This will likely be accomplished through continued improvement of the current squad and the addition of a second squad,” says Spak, “which we believe will happen in August.”

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To that end, Spak reiterated an outperform (i.e. buy) rating on RIVN with a price target of $77. If the target is achieved, RIVN shares could provide returns of approximately 143% over the next 12 months. (To see Spak’s track record, Click here)

Reflecting Spak’s positive view, Baird’s Ben Kallo thinks the results could point to a sea change at Rivian.

“RIVN faced some growing pains early in production,” the analyst noted, “but the news shows a step in the right direction.”

In fact, the analyst believes that as the EV story unfolds globally, Rivian has a “solid opportunity to challenge Tesla’s current dominance.”

Consistent with this view of RIVN’s underlying strength, Kallo rates the stock as an outperformer (i.e. a buy), with a price target of $67 implying a 12-month upside of around 112 %. (To see Kallo’s record, Click here)

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Looking at the consensus breakdown, 8 buys, 5 holds, and 1 sell have been assigned over the past three months. As a result, RIVN receives a moderate buy consensus rating. Based on the average price target of $49, the shares could rise about 55% over the next twelve months. (See Rivian’s stock forecast on TipRanks)

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Disclaimer: Opinions expressed in this article are solely those of the featured analyst. The Content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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