Lowering expectations has been a move many companies have succumbed to in recent times. For Rivian (RIVN), the well-known factors such as chip shortages and supply chain woes have been exacerbated by more company specific developments. These include January’s halt to production to make adjustments to the vehicle lines, whilst Omicron took 800 plant workers out of circulation for a period. As such, the company has reduced expectations of the number of vehicles it will deliver in 2022.
However, supported by recent data, RBC analyst Joseph Spak has “increased confidence that RIVN’s production ramp is improving.”
Going by the noises management made on the 4Q21 earnings call, and following some calculations, Spak thinks 1Q22’s production level is currently around 2,370.
In another positive development, while lacking a complete data set, Rivian app downloads appear to be on the rise, which Spak believes is “supportive of increasing vehicle deliveries.”
For now, Spak keeps his 2,100 1Q22 delivery forecast as is, but the analyst adds that his level of confidence is “higher,” while it is certainly not out of the question Rivian could exceed that mark.
For comparison purposes, Visible Alpha consensus has 1Q22 deliveries reaching 1,500.
With more “positive data points” potentially on the way, and a share price which year-to-date is down by 55%, Spak considers current levels as an “attractive entry point for long-term holders,” while also noting that hitting near-term targets could lead to renewed investor confidence.
Therefore, Spak maintains an Outperform (i.e. Buy) rating, backed by a $100 price target. Investors could be sitting on gains of ~115%, should Spak’s forecast play out as anticipated. (To watch Spak’s track record, click here)
What does the rest of the Street make of Rivian’s prospects? Based on 10 Buys vs. 5 Holds, the analyst consensus rates this stock a Moderate Buy. The average price target is a more modest $76.08, yet that figure could still generate solid returns of 64% in the year ahead. (See Rivian stock analysis 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.
