'Demand Creator' Rivian Gets Price Target Lift Ahead Of Q2 Print As Analyst Hopeful Of Long-Term Outlook

Rivian Automotive, Inc. RIVN stock has recently garnered considerable attention and positive reviews from sell-side analysts, who think the company is positioning itself as a formidable competitor to market leader Tesla, Inc. TSLA.

On Thursday, Needham analyst Chris Pierce increased the price target for Rivian’s stock. Maintaining a Buy rating on Rivian, Pierce raised the price target from $28 to $31, suggesting a 19% upside from the current levels. This marks a consecutive price adjustment, as the analyst had previously raised the price target from $26 to $28 in early July. Needham had also added the stock to its Conviction List during that period.

Pierce explained that the latest price target adjustment came ahead of Rivian’s second-quarter results and followed another iteration of its electric vehicle OEM used vehicle price tracker. Rivian is scheduled to release its quarterly results on August 8, after the market closes.

In comparing Rivian to the Ford Motor Co.’s F F-150 Lightning, Pierce noted that Rivian performed better in Needham’s weekly check of used vehicle prices. Despite selling a similar number of vehicles, Rivian had a smaller absolute number of used R1T vehicles offered for resale compared to the F-150 Lightning EV.

Moreover, new listings of used Rivian vehicles were lower relative to the F-150 Lightning. Rivian’s used-vehicle prices also showed less depreciation compared to F-160 Lightning, which recently underwent an 11% price cut for new vehicles.

See Also: How To Buy Rivian (RIVN) Stock

A Demand Creator: Pierce highlighted Rivian’s role as “a demand creator,” with the majority of its buyers being first-time pickup truck owners. Additionally, he noted that Rivian’s R1S SUV is leading in its category, especially against mostly smaller crossover EV SUVs.

The analyst expressed confidence in Rivian’s long-term estimates, citing the company’s solid demand, increasing vehicle production, and detailed per-vehicle cost savings.

Q2 Expectations: Looking ahead to the second-quarter results, Pierce anticipated that Rivian would maintain a conservative posture and might not raise its 2023 production guidance.

However, he suggested that margins could offer upside potential due to higher production and deliveries, resulting in increased fixed cost absorption. The company may also shed light on further improvements as production ramps up and in-sourcing increases.

Rivian ended Thursday's session down 4.05% at $26.05, according to Benzinga Pro data.

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