Analysts at Guggenheim are bullish on Rivian Automotive (NASDAQ:RIVN), initiating the company's shares with a Buy rating and $18 price target in a note to clients Tuesday.
The investment firm said it sees a compelling catalyst path that supports its R2/R3 optimism thesis. "We see a credible path to breakeven gross margin in 4Q24, informed by a detailed margin build and encouraging updates surrounding the 2025 model year R1 lineup," said analysts.
In addition, they also highlight potential upside to core guidance elements, and a reduction in cash burn. The firm says this will help alleviate some near-term overhang on shares.
While EV sentiment remains negative, analysts believe RIVN is "uniquely positioned to demonstrate to a growing share of younger, digitally oriented consumers" that electric vehicles are not only cleaner and greener, but can deliver a superior product compared to ICE vehicles enabled by software, technology and thoughtful design elements.
"Our detailed analysis of RIVN's breakeven glidepath and R2/R3 economic potential leads us to the conclusion that RIVN will emerge from EV winter as a market leader and advise clients to BUY RIVN ahead of anticipated positive 2H inflection in result," concludes the firm.