Top-rated Bank of America analyst John Murphy weighed in on EV maker Rivian’s (NASDAQ:RIVN) $1.3 billion convertible notes offering announced earlier this week.
The analyst pointed out that this capital raise was expected considering Rivian’s cash burn but came earlier than Murphy’s forecast of capital raise of $5 billion each in 2024 and 2025.
Murphy added that RIVN’s decision to raise additional liquidity could be due to the slower-than-expected increase in production and now the company could break even later than expected.
The analyst commented, “We believe the company opted for an earlier round of financing to ensure that financial resources are sufficient to bridge the company to profitability and avoid larger last minute financing rounds, which may prompt nervousness across the investor base.” Murphy has a Buy rating and a price target of $40 on the stock. The analyst’s price target implies an upside potential of 174.7% at current levels.
Overall, analysts remain cautiously optimistic about RIVN stock with a Moderate Buy consensus rating based on 13 Buys, four Holds, and two Sells.
