Last month, Rivian (RIVN) said supply chain woes were the reason why it was lowering its production forecast for the year by half – to 25,000 vehicles. Luckily for investors, there were no more estimate slashes when the EV startup announced 1Q22 production and delivery totals on Tuesday.
Rivian manufactured 2,553 vehicles in the quarter and delivered 1,227 units. The company also said it expects to meet the 25,000 production target.
“After two quarters of expectations reduction,” says Baird analyst George Gianarikas, “we are encouraged that production expectations appear to have stabilized.”
Offering further encouragement is the fact production has markedly increased from 4Q21’s levels of 1,015, especially considering the supply chain headwinds have affected management’s ability to “deliver on continued order growth.”
Rivian management stated on the earnings call in early March that it had produced 1,410 units as of March 8. According to Gianarikas’ calculations, the “implied” production rate in the first two months of the quarter was 148 automobiles per week. As another 1,143 vehicles were manufactured by the end of the quarter, this suggests weekly production had increased to ~326 vehicles/week.
That’s all well and good, but with more than 22,000 vehicles to make by the end of the year, the weekly output needs to increase from 326 to 576 vehicles each week to satisfy expectations. Gianarikas remains “confident that this ramp is achievable.”
Accordingly, Gianarikas reiterated an Outperform (i.e., Buy) rating along with an $84 price target, suggesting shares will climb ~116% higher over the coming months. (To watch Gianarikas’ track record, click here)
RBC’s Joseph Spak shares Gianarikas’ optimism. While the analyst was expecting higher deliveries (~2,100), the lower figure is probably down to him underestimating “vehicles in transit.” Rivian’s plant is in Illinois, but Spak reckons most of the initial deliveries are probably on the coasts.
Updates such as the latest one could provide a real boost for the stock’s prospects. “We believe stronger than expected 1Q22 production is a good first step to rebuilding investor confidence,” said the analyst. “While we are cognizant of upcoming lock-up (the lockup expires around May 8), we still believe shares reflect strong mid-term risk/ reward profile.”
Unsurprisingly, Spak also rates RIVN an Outperform, and his bullish $100 price target suggests 157% growth in the year ahead. (To watch Spak’s track record, click here)
Looking at the consensus breakdown, there are currently another 8 bullish RIVN reviews and with the addition of 5 fence sitters, the stock claims a Moderate Buy consensus rating. There are plenty of gains projected here; going by the $76.50 average target, the stock will add 97% of muscle over the one-year timeframe. (See Rivian stock forecast on TipRanks)
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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.
