Rivian's Road Is Clear Following Capital Raise, UBS Sees Several Catalysts Ahead Including Guidance Boost Just Weeks Away

Rivian Automotive Inc's RIVN recent capital raise led to near-term weakness but positioned the company for greater upside moving forward.

Here's why UBS believes it's time to buy. 

UBS Moves To Buy: UBS analyst Joseph Spak upgraded Rivian from a Neutral rating to a Buy rating and lowered its price target from $26 to $24, citing an improved risk/reward opportunity. 

With Rivian shares down about 20% since the company announced a $1.5 billion convertible debt offering, UBS sees greater opportunity for investors. 

"With the raise out of the way, the market can refocus on improving fundamentals. We also see a reduced probability of an additional capital raise over the next ~1 year with capital likely not needed until the end of 2025," Spak said in a new note to clients.

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UBS believes Rivian still needs an additional $3.5 billion in capital to fund future growth but doesn't expect the next raise to come until the fourth quarter of 2025. 

A day before the company announced the green convertible note offering, it reported strong production and delivery numbers and reaffirmed expectations for total vehicle production of 52,000 units in 2023.

The UBS analyst expects the EV maker to produce approximately 54,500 vehicles this year and noted Rivian could raise estimates when it reports earnings on Nov. 7. Spak also believes the company is on track to reach positive gross margins by the end of 2024 which should act as another catalyst for the stock. 

In the long term, the EV maker looks positioned to benefit from labor cost advantages given the recent United Auto Workers (UAW) union strikes, he said. Rivian is also planning to roll out a more cost-efficient R2 platform in 2026, which should create more profitability momentum for the company. 

"We are positive on Rivian's product and opportunity, forecasting 10x unit growth by 2030," the UBS analyst said. 

See Also: Rivian Closing The Gap With Tesla In Premium EV Market: What Data Reveals

RIVN price Action: Rivian shares were up 5% at $19.72 at the time of publication, according to Benzinga Pro.

Photo: Courtesy of Rivian.