Sentiment is hardly ever static on Wall Street and can shift abruptly. Take Rivian (NASDAQ:RIVN) for example. Shares of the EV maker are up by 80% over the past month alone, marking a sharp turnaround following the stock’s continued downturn over the past year and a half or so.
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The surge comes on the back of strong Q2 delivery numbers and the sense the once-struggling EV start-up has now turned a corner. In fact, Morgan Stanley analyst Adam Jonas notes that the Q2 delivery haul of 12,640 came in higher than his expectations for 9,500, suggesting “strong underlying demand.” Moreover, the fact the company delivered over 90% of vehicles produced in the quarter indicates its previous supply issues are “in the rear-view.”
There are other elements that Jonas thinks make Rivian an interesting name in the EV space. For one, Jonas does not think Tesla’s “avant-garde” pickup truck, the Cybertruck will “significantly cannibalize” R1 demand over the next 12 months. This is partly down to consumers potentially opting for alternatives to Tesla’s current dominance. Almost 1 out of 20 new cars sold in the US is a Tesla and the Model Y is the world’s top selling passenger vehicle. “A car is an expression of personal style and values,” notes Jonas. “Many luxury car buyers want an attractive alternative to the ubiquitous Tesla.”
Furthermore, Jonas emphasizes that Rivian’s inclusion in Tesla’s supercharging network is also a boon and helps “de-risk an important post purchase pain point for EV buyers on range anxiety while demonstrating, at the margin, a more frugal and capital disciplined approach to infrastructure.”
As far as the stock is concerned, while the surge has seen Rivian’s valuation rise significantly, even following the rally, the analyst believes Rivian shares still trade at a “substantial discount” to EV leader Tesla and also at a big discount compared to EV peer Lucid.
So, what does all this ultimately mean for investors? Jonas reiterated an Overweight (i.e., Buy) rating, backed by a $24 price target, suggesting the shares are just about priced correctly right now. (To watch Jonas’s track record, click here)
Turning now to the rest of the Street, where the stock claims a Moderate Buy consensus rating, based on 10 Buys, 5 Holds and 1 Sell. The strong recent performance has sent the shares beyond the $23.50 average target. (See Rivian stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
