How Rivian Became Analysts' Darling: All Upsides Of Tesla, Minus The Risks?

Rivian Automotive, Inc‘s RIVN standing among sell-side firms has improved notably, particularly after the company reported its second-quarter deliveries.

A slew of analysts upped their price target for the shares of the electric vehicle startup. An analyst, who announced back-to-back price target revisions, said Rivian confers all the advantages of Tesla, Inc. TSLA while excluding the risks the Elon Musk-led company faces.

What Happened: Rivian is the best way to play the transition from ICE to EVs, said Needham analyst Chris Pierce in a note released last week. While legacy automakers are going through a difficult pivot, Rivian, being an EV pureplay, is following Tesla's vertically integrated path, the analyst said.

The Irvine, California-based company, however, sidesteps the "more controversial/harder-to-value FSD/Robotaxi angle," he added, referring to Tesla’s autonomous driving software development.

Pierce sees Rivian as an "under-owned" asset when taking into account company data and a difficult investing backdrop in 2022. The stock sell-off peaked just as the company realized positive production momentum in the first half of 2023, he added.

See Also: Is Rivian (RIVN) Stock A Good Buy Right Now

Here's a compilation of post-deliveries analyst action:

• Needham's Pierce, who has a Buy rating on Rivian, raised the price target for the stock from $26 to $28 immediately after the second-quarter deliveries were released. Last week, he hiked it further to 31.
•  CANACCORD Genuity analyst George Gianarikas maintained a Buy rating and set a $40 price target for Rivian.
•  DA Davidson upgraded the stock from Underperform to Neutral and increased the price target from $11 to $18.
•  Wedbush analyst Daniel Ives maintained an Outperform rating and lifted the price target from $25 to $30.
•  Barclays analyst Dan Levy maintained an Overweight rating and increased the price target from $22 to $30.
•  Tigress Financial reiterated a Buy rating and initiated a price target of $36.

What's Driving The Optimism: Most analysts attribute the positive opinion to the company's production ramp-up and delivery momentum. Tigress Financial Partners’ Ivan Feinseth said the company is on the cusp of seeing significant revenue growth and a path to profitability due to the production and deliveries ramp-up and the improvement in production efficiency.

Data released by the California New Car Dealers Association showed that Rivian topped in terms of year-over-year growth in brand registrations for the first half of the year in California, signaling strong uptake.

Feinseth said, “RIVN's advanced and extensive connected software-focused ecosystem will have a significantly higher margin and drive additional cash flow growth, greater Return on Capital, and Economic Profit growth which should drive long-term shareholder value creation.”

The company reports its second-quarter earnings on Aug. 8; it will shed further clarity on fundamentals and prospects. Analysts, on average, expect the company to report a narrower loss of $1.41 per share and about 170% revenue growth to $978.75 million.

Price Action: Rivian closed Friday's session up 3.42% at $26.94, according to Benzinga Pro data. The stock has rallied over 46% year-to-date.

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Read Next: Tesla Moves Forward With India Plans, Rivian Gets Another Price Target Boost, Chinese Startups Seek German Lifeline: Biggest EV Stories Of The Week

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