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Wolfe Research reiterated an Outperform rating and $40.00 price target on Rivian Automotive (NASDAQ:RIVN) after the electric vehicle company reported a 4Q production and delivery miss.
Rivian produced 10,020 vehicles in the fourth quarter, slightly short of the 10,680 implied by the company’s full-year guidance. The company’s retail deliveries, at 8,054, also fell short of expectations. However, Wolfe analysts note that RIVN’s production, which rose by 48% vs. Q3, continued a strong sequential climb. And they believe that RIVN’s EBITDA guidance reflected several thousand units in transit.
They wrote in a note, “Overall, with 114,000 R1 (Pickup and SUV) and close to 100,000 EDV units in backlog as of Q3, Investors aren’t questioning Rivian’s demand/revenue prospects. The bigger issue has been conviction in this company’s earnings prospects (losses were $77,000 per vehicle in Q3). That said, we believe that there may be an opportunity for RIVN to address questions about their business by Q2 or Q3 of 2023, when gross losses per unit should be less than the ($13,000-$14,000) price increases embedded in the company’s backlog.”
The analysts believe that the EV maker should be producing vehicles that reflect these price increases by 2024. Beyond this, Wolfe Research is looking forward to the reveal of RIVN’s more affordable platform later this year, and details on the company’s battery / CAM vertical integration plans, which are viewed as critical to cost competitiveness at lower price points.
Shares of RIVN are down 0.69% in pre-market trading on Wednesday.
