Friday, CFRA analyst Garrett Nelson increased the 12-month price target for Rivian Automotive Inc (NASDAQ:RIVN) to $8 from the previous $5, while continuing to advise a Sell rating on the company's shares. The adjustment reflects alignment with the average of the electric vehicle (EV) peer group.
Nelson also revised the 2024 adjusted earnings per share (EPS) estimate to -$4.35, a slight improvement from the former -$4.40 estimate, but left the 2025 EPS forecast unchanged at -$3.30. According to InvestingPro data, Rivian's stock, currently trading at $16.06, has shown significant volatility, with a beta of 2.06. The company maintains a market capitalization of $13.52 billion, despite challenging market conditions.
Rivian reported fourth-quarter vehicle deliveries totaling 14,183 units, marking a 1.5% year-over-year increase and meeting the company's guidance. However, the production for the same period showed a decline, with 12,727 units produced, down 27.4% from the previous year.
Despite the production dip, Rivian's fourth-quarter results surpassed CFRA's projections, which estimated 11,251 units for production and 14,104 units for sales. InvestingPro analysis reveals the company faces significant profitability challenges, with a gross profit margin of -43.42%, though it maintains strong liquidity with a current ratio of 5.09.
The company's full-year figures also exceeded expectations, reaching 51,579 units sold and 49,476 units produced. These totals were slightly ahead of Rivian's own annual guidance, which anticipated sales between 50,500 and 52,000 units and production between 47,000 and 49,000 units.
Nelson, however, expressed skepticism regarding Rivian's ability to achieve the positive gross margin for the quarter that management had forecasted, a detail that will be clarified when the company reports its earnings on February 20.
Nelson reiterated concerns about Rivian's cash burn rates and the broader EV market demand, which underpin CFRA's Sell recommendation. The analyst's remarks highlight caution despite the increase in the price target and suggest that investors will be looking closely at the upcoming earnings report for further insights into Rivian's financial health and market position.
InvestingPro subscribers have access to over 10 additional exclusive insights and a comprehensive Pro Research Report that provides deep-dive analysis of Rivian's financial health, valuation metrics, and growth prospects, essential for making informed investment decisions in this volatile EV market.
In other recent news, Rivian Automotive has made significant strides in meeting its 2024 production and delivery targets.
The company successfully produced 49,476 vehicles and delivered 51,579, overcoming previous component shortage issues. Rivian's fourth-quarter financial results are due soon, adding to the anticipation among investors. Truist Securities maintains a hold rating on Rivian's stock, focusing on the company's upcoming earnings release.
Furthermore, Rivian has entered a confidential agreement with the United Auto Workers, potentially leading to unionization at its Illinois factory. This move is contingent on Rivian achieving profitability and could facilitate a $6.6 billion conditional loan from the US Energy Department for a new EV plant construction in Georgia.
Meanwhile, analyst firms such as Goldman Sachs and Benchmark have maintained neutral and buy ratings respectively. However, the incoming administration's potential elimination of the Passenger EV tax credit adds a layer of uncertainty to the electric vehicle market.
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