Wall Street maintains its call to buy
Mizuho analyst Vijay Rakesh said current prices are a “good entry point” for Rivian stock (ticker: RIVN). He hosted Rivian CFO Claire McDonough at an event hosted by his brokerage.
Rakesh came away from his meeting thinking that production is improving and that a second shift will be added at the Rivian’s Normal, Illinois plant in the second half of the year. More teams, of course, will boost production.
Rivian expects to deliver around 25,000 vehicles in 2022. Around 8,000 of these are expected to be delivery vans for
(AMZN). Rivian did not immediately respond to a request for comment on the mix of the 25,000 vehicles.
Rakesh’s price target for Rivian shares is $80 per share, up nearly 140% from Friday’s close of $30.96. It rates Buy actions.
He is not alone in his bullish views. Overall, about 65% of analysts covering equity rates stocks are buying. The average buy odds ratio for stocks in the
is about 58%. Analysts’ average price target, however, is below around $54 per share. Still, this represents an increase of nearly 75% from recent levels.
By this calculation, Rivian stock looks more attractive than when analysts first rolled out the hedge. In December, shortly after Rivian’s IPO, about 64% of analysts rated the stock buy, and analysts’ average price target was around $134 per share. It was only about 10% more than the $122 price tag.
Since then, the shares have taken a beating, falling around 75%. The
is down about 25% over the same period.
Rising interest rates and inflation have undermined investors’ willingness to hold shares in start-up companies. This is partly the reason for the decline. Rivian also encountered production ramp-up issues. In December, Wall Street was hoping for more than 40,000 shipments in 2022. That was ahead of Rivian’s forecast for 25,000 units.
Rivian’s rating remains more positive than
(TSLA). Half of analysts covering Tesla shares are buying. Analysts’ average price target is around $942 per share, up about 24% from recent levels.
Tesla is trading at around 6.8 times estimated 2023 sales. Rivian is trading for around 4.6 times that amount. Sales are one thing, revenue is another. Rivian is not yet profitable. Tesla has been consistently profitable since mid-2019.
The bullish call could help stocks on Tuesday. Rivian stock is up around 1.7% in early trading. S&P 500 and
Dow Jones Industrial Average
futures are both down about 0.6%.
Write to Al Root at [email protected]