By Vlad Schepkov
Deutsche Bank analysts reiterated a "Buy" rating on Rivian Automotive (NASDAQ:RIVN) but cut their Price Target to $28 from $43 ahead of the Q4 report (scheduled for February 28th, after market close), citing "the delayed launch of R2, and previous decision to push off expansion in Normal" factory.
In their latest note, the analysts lowered their 2023 delivery projections for the automaker "to 55k units (from 60k units), given downtime expected in Q1 from the transition to using Enduro for the EDV platform and similarly for the R1 platform in Q4."
While the analysts believe the company "could guide to 55k-65k in production", they anticipate "production changes will limit output" despite the "recent ramp-up and the addition of the second shift."
Deutsche Bank also weighed in on margins, noting that despite improvements on the heels of "operating leverage from higher volume, the absence of startup cost, mix and pricing, and the transition to using LFP and in-house motors", they continue to "expect gross margin in the negative territory and not turning positive until 2024."
Overall, the analysts believe "the pull-back in multiple is justified given the delayed launch of R2, and previous decision to push off expansion in Normal could limit the volume growth through mid-decade until the second facility can ramp in 2026+ and demonstrate meaningful volume growth", as they cut the Price Target to $28 and maintain a "Buy" rating.
Shares of RIVN are trading nearly 3.5% down today, and are down over 8% YTD.