The Rivian ratings spate has started. Investors should be happy.
Rivian Automotive received its first price rating. Wedbush analyst Dan Ives thinks it is a buy. He set his price target at $130, almost 25% above where the company had closed for trading during Friday.
Ives has called Rivian an “electric vehicle stalwart in the making,” while adding that the company “looking to strategically launch itself into a market that is untapped as Pickup/SUV Truck EVs are just about nonexistent in the electric vehicle market of today.” SUVs and trucks are very popular in the United States, usually accounting for over 60% of all passenger vehicle sales.
Given it is the first rating it has received, it is the first chance for traders to look at estimates. Ives predicts $3.6 billion in sales from around 45,000 vehicle deliveries next year and $8.4 billion in vehicle sales from about 105,000 deliveries in 2023. The business is not expected to produce a profit in either year.
Ives target price implies the Rivian stock should trade for around 15 times estimated 2023 sales. Shares of Tesla, the electric vehicle leader, trade for around 11 times estimated 2023 sales.
It is a big, growth stock valuation, but Ives does know his way around growth stocks. He covers electric vehicles and tech stocks such as Salesforce.com. On the vehicle side of his coverage list, Ives rates Tesla shares and General Motors shares both Buy. His Tesla price target is $1,400 per share. His GM price target is $85 per share.
GM’s Buy ratings, Rivian and Tesla are based on Ives’ expectation that electric vehicles will become the most dominant form of personal travel in coming years.
Rivian investors will be happy welcome some Buy ratings. The share price is down from a Nov. 16 high of almost $180 per share. Rivian stock dropped 6.7% last week in what was a hard week for growth stocks. The Russell 1000 Growth Index fell 2.2%. The S&P 500 decreased 1.2% for the week and the Dow Jones Industrial Average dropped 0.9%.
Author: Steven Sinclaire