Rivian (NASDAQ:RIVN) shares enjoyed a brief rally during the summer, but the stock’s performance in 2024 has remained consistently disappointing. To wit, shares have crashed by 50% since the turn of the year.
Despite being viewed as a standout among EV startups, Rivian still faces significant hurdles, particularly as it continues to incur substantial losses on each vehicle sold.
Looking ahead, Jefferies analyst Philippe Houchois warns the road for Rivian may remain bumpy. The company has targeted Q4 to achieve positive gross margins, but Houchois believes this goal could be delayed due to production setbacks, particularly a supplier issue causing a shortage of components for the new Enduro motor.
“Meanwhile,” the analyst further added, “the ramp-up of R1 Gen 2 is slower than anticipated and the limited inventory of Gen 1 and Gen 2 models could slow deliveries.”
That has resulted in Houchois lowering his 2024 production/deliveries estimates by 3,000 to 54,000/51,000 units, respectively, and reducing his revenue forecast by 4% to $4.53 billion. Additionally, Houchois now sees gross margin coming in at -26.6% vs. -23% beforehand.
On the other hand, Houchois expects to see “material improvement” in variable costs in Q3 while over the coming weeks there should be further details regrading the commercial terms of the VW JV (joint venture).
In fact, while those issues noted above are to be considered, eyeing the company’s prospects, Houchois thinks Rivian could offer a long-term opportunity.
“Rivian’s investment case remains high-risk, but we see value in widening the brand, a de-risked funding plan and scaling opportunities with VW in hardware and software,” the 5-star analyst said. “It is still early to gauge JV valuation and third-party opportunities, but Rivian continues to stand out in successfully implementing an SDV architecture well ahead of most Western Legacy OEMs.”
To this end, Houchois rates RIVN shares a Buy, along with a $17 price target. Should the target be met, a twelve-month gain in the shape of ~44% could be in store. (To watch Houchois’s track record, click here)
10 other analysts join Houchois in the bull camp and with an additional 9 Holds and 2 Sells, the consensus view is that RIVN stock is a Moderate Buy. The $17.24 average price target is only a touch above Houchois’s target and factors in one-year returns of ~46%. (See Rivian stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
