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Shares of Rivian (NASDAQ:RIVN) are in the green today following a positive note from Mizuho. The investment bank recently hosted a conference call with CFO Claire McDonough during its annual Auto Tech seminar. After the call, analyst Vijay Rakesh reiterated the firm’s “buy” rating on RIVN stock and its price target of $80.
Rivian’s shares have lost more than 65% this year. The electric vehicle (EV) company has dealt with a multitude of problems, such as supply chain challenges, ramp-up issues and rising rates. In addition, Rivian expects to deliver 25,000 vehicles this year, of which 8,000 are electric delivery vans (EDVs) for Amazon (NASDAQ:AMZN).
During the first quarter, Rivian manufactured 2,553 vehicles and delivered 1,227 EVs. In order to meet its annual goal, the company must increase its production by more than tenfold for the rest of the year.
Despite this, Rakesh issued a positive note following the conference call. Let’s get into the details.
Mizuho Is Bullish on RIVN Stock
Rakesh and the Mizuho team believe production lines for the R1T and EDV are “healthy” when not factoring in commodity chips. Rakesh adds that “vertical integration with LFP and Enduro” will help drive down costs. By 2024, Rivian may be able to reach earnings before interest and taxes (EBIT) breakeven status.
Rakesh also views the company’s management shift as a positive signal. On June 1, Frank Klein will take over as the chief operating officer (COO). Klein will oversee production, manufacturing engineering and supply chain. Meanwhile, the current head of manufacturing engineering, Charly Mwangi, will be leaving the company.
Rakesh also observed that RIVN stock is trading at a 30% discount to Tesla (NASDAQ:TSLA) based on 2023 price to sales estimates. With Mizuho bullish on Rivian, let’s take a look at how other analysts feel.
2 Analysts Chime in on Rivian
- RBC Capital has a price target of $77. Analyst Joseph Spak explained that during Q1, production was 349 vehicles per week. Since then, the firm’s proprietary data shows Rivian produced 260 vehicles per week. This appears to be due to supply constraints, such as semiconductor shortages. On the bright side, management appears to be more confident it will see supply chain improvements and ramped-up production in the second half of the year.
- Morgan Stanley has a price target of $60. At its initial public offering (IPO), analyst Adam Jonas pointed out Rivian’s management had spending plans to produce one to two million units by the end of the decade. However, the company “struggles to find parts to run even [one] full shift.” The analyst adds that if Rivian can “pace itself” when it comes to its EV ambitions, he will feel confident in the company again. RIVN is currently trading at the low end of Morgan Stanley’s revised base-case range of $35 and above its bear-case target of $10.
- Finally, Rivian has an average price target of $60.80 among 15 firms covering the company.
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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