On Monday, Stifel, an investment firm, adjusted its outlook on Rivian Automotive Inc (NASDAQ:RIVN), reducing the price target to $16.00 from the previous $18.00. Despite this change, the firm continues to recommend a Buy rating for the electric vehicle manufacturer's stock.
The adjustment comes as Rivian faces short-term challenges but shows promising signs of progress toward significant achievements. Stifel anticipates that Rivian will reach a positive gross profit in the fourth quarter of 2024 and sustain this profitability throughout 2025. Additionally, the launch of the R2 model is highlighted as a pivotal event for the company.
Stifel's analyst has expressed confidence in Rivian's financial position, noting that the company has enough liquidity to support its operations up to the R2 launch. This is attributed to Rivian's solid balance sheet and potential investments from Volkswagen (ETR:VOWG_p), which are expected to provide the necessary capital to scale up the midsize platform production in Georgia.
Reaffirming the Buy rating, Stifel acknowledges that while the target price has been trimmed to $16, the investment firm remains optimistic about Rivian's prospects. The revised price target is grounded in a discounted cash flow (DCF) analysis, which factors in the company's projected cash flows and investment risks.
In other recent news, Rivian Automotive Inc. faced supply chain challenges in the third quarter of 2024, impacting its production and financial performance. Despite these setbacks, the company produced 13,157 vehicles and delivered 10,018 units, generating $874 million in revenue. However, Rivian reported a gross loss of $392 million, revealing a loss of approximately $39,100 per vehicle.
The company also reaffirmed its annual production guidance of 47,000 to 49,000 vehicles and anticipates a modest gross profit in Q4. Rivian revised its 2024 adjusted EBITDA guidance to a loss of $2.825 billion to $2.875 billion, while a joint venture with Volkswagen is expected to support growth and lead to positive cash flow in the future.
InvestingPro Insights
Recent data from InvestingPro adds depth to Stifel's analysis of Rivian Automotive Inc. Despite the reduced price target, there are both challenges and potential upsides for investors to consider.
InvestingPro data shows that Rivian's market capitalization stands at $10.81 billion, reflecting the market's current valuation of the company. The company's revenue for the last twelve months as of Q3 2024 was $4.551 billion, with a revenue growth of 20.33% over the same period. This growth aligns with Stifel's optimistic outlook on Rivian's future prospects.
However, investors should note that Rivian is currently not profitable, with a negative gross profit of $1.98 billion and an operating income margin of -123.25% for the last twelve months. This underscores the challenges mentioned in Stifel's report and is reflected in two key InvestingPro Tips: "Quickly burning through cash" and "Suffers from weak gross profit margins."
On a positive note, an InvestingPro Tip indicates that Rivian "Holds more cash than debt on its balance sheet," which supports Stifel's confidence in the company's liquidity position leading up to the R2 launch. Additionally, another tip mentions that "8 analysts have revised their earnings upwards for the upcoming period," suggesting growing optimism among market observers.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips that could provide valuable insights into Rivian's financial health and market position. These additional tips could help investors make more informed decisions about Rivian's stock in light of Stifel's updated outlook.
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