Cantor Fitzgerald upgraded Rivian Automotive (NASDAQ:RIVN) to an Overweight rating (From Neutral) and reiterated their 12-month price target of $29.00 on the electric automaker’s stock after a recent pullback creates an entry opportunity for investors.
The share price has underperformed by ~27% in the past month, and is down ~12% YTD. As of Thursday’s close, RIVN’s stock trades at $16.17, with an over 79% upside.
Rivian pre-announced on October 2, that the electric automaker had manufactured 16,304 vehicles in 3Q23, surpassing the estimated 14,580 (compared to 13,992 vehicles in 2Q23). Additionally, they reported delivering 15,564 vehicles in 3Q23, exceeding the estimated 12,984 (compared to 12,460 in 2Q23).
As of the third quarter of 2023, Rivian has produced 39,691 vehicles and delivered 35,970 vehicles. Despite this, the company's annual production guidance remains unchanged at 52,000 vehicles, requiring the production of only 12,309 vehicles in Q4 to meet their target.
Analysts at Cantor Fitzgerald believe the company will achieve and exceed its annual guidance, and models Rivian producing 14,309 vehicles in 4Q23 and 54,000 vehicles for the year.
Rivian announced on October 4 that they expect 3Q23 revenue to fall between $1.29 billion and $1.33 billion. Additionally, the company guided an anticipated 3Q23 ending cash balance of $9.1 billion.
At the same time, Rivian also announced its intention to offer green convertible senior notes with an aggregate value of $1.5B in a private offering to institutional buyers. The company said they intend to offer the initial purchasers of the notes an option to buy up to an additional $225 million principal amount of notes.
As of 2Q23, Amazon (NASDAQ:AMZN) owns an approximate 17% stake in RIVN, making it the largest shareholder. The two companies have a partnership for the supply of up to 100,000 Electric Delivery Vans over 10 years, contributing around 21% to total revenue in FY22 ($343M), with similar expectations for 2023.
Analysts at Cantor Fitzgerald believe that “RIVN's partnership with Amazon is a significant differentiator.” However, their base case conservatively models the company only delivering around 70% of the total partnership agreement.
“If the company is able to deliver >70,000 EDVs, this would result in further upside that we currently do not include in our model, and we believe that it could potentially reach up to ~$7.4B in revenue through 2032E,” analysts at Cantor Fitzgerald wrote in a note.
Shares of RIVN are up 3.40% in pre-market trading Friday morning.