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D.A. Davidson Thinks Rivian (RIVN) Stock Can Fall to $24

Source: Miro Vrlik Photography / Shutterstock.com
Shares of RIVN stock are in the spotlight today following an initiation of coverage from D.A. Davidson. Analyst Michael Shlisky gave the electric vehicle (EV) company an “underperform&rdq…

Source: Miro Vrlik Photography / Shutterstock.com

Shares of RIVN stock are in the spotlight today following an initiation of coverage from D.A. Davidson. Analyst Michael Shlisky gave the electric vehicle (EV) company an “underperform” rating and a price target of $24. This target implies downside of about 23% from current prices.

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Shlisky ranks 3,522 out of 7,943 analysts on TipRanks. The analyst has a success rate of 33% and an average one-year return of 2.1%. Meanwhile, RIVN stock has an average price target of $60.80 among 15 firms covering it, according to Yahoo! Finance.

Let’s dive into the details of D.A. Davidson’s new coverage on Rivian.

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RIVN Stock: D.A. Davidson Issues Price Target of $24

Shlisky said his firm “loved the truck” it tested as part of its coverage initiation on RIVN stock. However, the analyst is concerned that production ramp-up issues and negative headlines in the coming months will outnumber any positive factors. Rivian also has to deal with supply-chain issues, not having the same long-term supplier relationships of more established automakers. The analyst elaborated:

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“RIVN has done better than most with respect to its ramp-up of production. It remains to be seen whether RIVN can continue to accelerate production as smoothly as its remarkable vehicles can drive, especially as new facilities open.”

Rivian expects to produce 25,000 vehicles this year, down from its previous guidance of 50,000 vehicles. The company said semiconductor and wire harness shortages have gotten in the way. CEO RJ Scaringe doesn’t expect the semiconductor industry to normalize until next year, either.

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D.A. Davidson’s initiation also follows a price target reduction from Morgan Stanley. On May 17, analyst Adam Jonas lowered his price target from $85 to $60 per share. That target implies upside of more than 90%. On TipRanks, Jonas ranks 992 out of 7,943 analysts. He has a success rate of 50% and an average one-year return of 7.7%.

Like Shlisky, Jonas is concerned about Rivian’s production ramp-up. He notes that, at the time of Rivian’s initial public offering (IPO), the company planned to produce 1 million to 2 million units by 2030. Currently, Rivian is struggling to “find parts to run even 1 full shift.”

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Jones explains that RIVN stock is currently trading below his revised base case range of $35 per share. However, it also trades above his revised $10 bear case price.

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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