Given the dark clouds hanging over the electric vehicle (EV) sector, the better-than-expected third-quarter earnings report by Rivian Automotive (NASDAQ:RIVN) is providing a much-needed respite. Subsequently, several Wall Street analysts have reiterated optimistic ratings on RIVN stock. Still, not all experts are bullish on RIVN, as the underlying industry faces some significant pressure.
Late yesterday, Rivian posted an adjusted loss per share of $1.19, per Barron’s. While a negative bottom line isn’t ideal, the Street had anticipated the EV upstart to incur a per-share loss of $1.31. For context, the company previously reported a loss of $1.08 in Q2 2023. For revenue, Rivian also posted Q3 sales of $1.3 billion, matching analyst expectations.
Even better, management raised its production guidance for the full year to 54,000 vehicles from about 52,000 units. In contrast, sector leader Tesla (NASDAQ:TSLA) missed on both earnings and revenue estimates for Q3. Additionally, the usually self-assured CEO Elon Musk tempered expectations for the upcoming Cybertruck and lamented tough economic conditions.
With the suddenly pessimistic Tesla as the benchmark, then, many analysts are seeing opportunity in RIVN stock. According to CNBC, “major firms, from Goldman Sachs to Morgan Stanley, view the EV maker as a strong play” — especially as competitors like luxury EV maker Lucid (NASDAQ:LCID) struggle to hit production goals.
RIVN Stock Draws Intrigue, But Also Skepticism
In particular, Goldman Sachs analyst Mark Delaney raised his price target on RIVN stock to $25, implying a robust 43.5% return from yesterday’s close. “We believe that the quarter was a modest incremental positive with respect to longer-term volumes, and the company is executing on its cost targets,” said the analyst.
Interestingly, though, Delaney maintained a “neutral” rating on RIVN stock. Meanwhile, Evercore ISI analyst Chris McNally issued a more optimistic assessment on shares, maintaining a $35 price target — a doubling from Tuesday’s close. According to CNBC, McNally “expects gross margin to break even by the end of 2024.” Morgan Stanley analysts also believe that Rivian carries “sufficient liquidity” to last through late 2025.
Despite this broader optimism, not every analyst is enthusiastic about Rivian. For example, while Wells Fargo analyst Colin Langan raised his price target by $5 to $24 per share, he noted a “murky line of sight” ahead for RIVN stock. “The company has a low margin for error in all aspects of its business […] Rivian must prove it can acquire the customer base, while maintaining low advertising costs,” said the analyst.
A low margin for error is exactly right. With EV demand plunging and dealership inventories rising, the sector fallout has stressed the broader value chain. Plus, the cheapest Rivian model costs $73,000, a tough ask in a high-interest rate environment amid mounting layoff fears.
Why It Matters
At the moment, analysts rate RIVN stock as a consensus moderate buy on TipRanks, although pensiveness is creeping in. Specifically, the assessment breaks down as 14 buys against six holds and one sell. Overall, the average price target for shares lands at $26.60, implying about 58% upside potential.
On the date of publication, Josh Enomoto did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
