By James Rogers
Rivian Automotive may have already seen the worst of chip-supply tightness, analyst says
Shares of Rivian Automotive Inc. (RIVN) gained more than 3% in morning trading Friday, as analysts were generally upbeat about the electric vehicle maker's second-quarter results.
Late Thursday, Rivian reported a narrower-than-expected second-quarter loss despite a challenging supply-chain environment, including ongoing issues with chips, and revenue that beat forecasts.
Rivian also reaffirmed its goal of making 25,000 electric vehicles this year.
See Now: Rivian loses nearly $2 billion in second quarter as expenses mount
"The ball is finally rolling," wrote Wedbush analyst Dan Ives, in a note released Friday, citing Rivian's top line beat, and its production and delivery numbers. "The company produced 4,401 vehicles and delivered 4,467 total vehicles this quarter while also increasing total reservations to 98K up from 90K total last quarter despite macro fears," he added.
"We believe Rivian is in a great position to capture the massive influx of current and future EV demand," Ives wrote.
Wedbush maintained its outperform rating and raised its price target to $45 from $40, which Ives said reflects further confidence in the company's production story.
Mizuho's Vijay Rakesh was also upbeat on the results, and about the potential impact from clean-energy legislation.
"RIVN reported a modestly better JunQ at $364M (Cons $336M), with demand continuing strong, offset by some supply constraints," Rakesh wrote in a research note. "We believe RIVN may have seen the worst of chip-supply tightness in the JunQ, with better semi supply ahead as production ramps (adding a 2nd shift)."
Rivian describes itself as a maker of "electric adventure vehicles," such as its R1T pickup truck and R1S SUV. The company also makes electric delivery vans, notably counting Amazon.com. Inc. (AMZN) as a customer.
"The Inflation Reduction Act was noted to potentially provide up to $40,000 incentives for commercial vehicles which could become a tailwind for RIVN as its EDVs [Electric Delivery Vehicles] ramp, though we believe R1 buyers will likely not qualify," wrote Rakesh.
See Now: Fuel cell, EV and solar stocks rally as climate bill makes 'alternative' energy more 'in the money'
Rivian has already warned that planned revisions to the EV tax credit would put it at a disadvantage to more established competitors, according to The Wall Street Journal.
Last weekend, the Senate passed the Inflation Reduction Act, which aims to reduce carbon emissions by roughly 40 percent by 2030. An expected vote on the measure is expected in the House of Representatives on Friday.
Mizuho maintained its Rivian buy rating, but lowered its price target to $65 from $70, citing multiple target compression.
D.A. Davidson's Michael Shilsky remained bearish on Rivian, but did nudge up his price target, as supply chain risks look set to fade.
"Our checks suggest that there could be further risks in the supply chain but for now, we do model improvement a few quarters down the road," Shilsky wrote. "We do note that macro conditions do not appear to have dampened demand for RIVN vehicles, which is clearly a good sign, but net/net we believe RIVN has to overcome numerous near-term challenges to potentially turn us more constructive on the stock."
Shilsky kept his rating at underperform, but raised its price target to $27 from $24.
Of the 18 analysts surveyed by FactSet, Shilsky was the lone bear, while 11 analysts were bullish and six were neutral.
Meanwhile, Investment research firm New Constructs recently added Rivian to its list of "zombie" companies, citing cash as a potential problem for the car maker.
Rivian: 'Zombie' company or charging down a path to EV success?
Rivian ended the second quarter with about $15.5 billion in cash and equivalents, down from about $17.0 billion at the end of the first quarter.
The company's shares have declined 61.4% this year, outpacing the S&P 500 index's fall of 11.3%.
(END) Dow Jones Newswires
August 12, 2022 10:01 ET (14:01 GMT)
Copyright (c) 2022 Dow Jones & Company, Inc.