Shares of Rivian Automotive (RIVN) are on the rise after several Wall Street analysts initiated coverage of the stock with mostly bullish ratings. Morgan Stanley analyst Adam Jonas started the electric vehicle maker with an Overweight rating as he calls the company "the one" that can challenge Tesla (TSLA). Voicing a similar opinion, Wedbush analyst Daniel Ives argued that Rivian is in "the catbird's seat" to take considerable market share in this EV arms race under its "visionary" CEO and founder RJ Scaringe. More cautious on the name, however, JPMorgan initiated coverage of Rivian with a Neutral rating as the analyst there believes the stock's valuation is "clearly already pricing in a lot" after the recent rise in the shares.
ANALYSTS ROLL OUT RIVIAN COVERAGE: Morgan Stanley analyst Adam Jonas initiated coverage of Rivian Automotive with an Overweight rating and $147 price target. Given Rivian's "compelling product," strong management, and access to capital underpinned by a strategic relationship with Amazon (AMZN), Jonas views the company as "the one" that can challenge Tesla, he told investors. Jonas thinks the company's R1T/R1S is "the most capable/desirable product in the market" for about $80,000 and that the electric delivery van has the potential to dominate the fast-growing final mile EV fleet "largely unaddressed by the EV market until now." He also calls the 100,000 figure for the company's order from Amazon "a stale number" and believes closer to 300,000 units from Rivian to Amazon is more likely through 2025 to 2026.
Wedbush analyst Daniel Ives also started coverage of Rivian Automotive with an Outperform rating and a price target of $130. The analyst noted that Rivian's debut vehicles, the R1T and R1S, are anticipated to launch in early 2022, competing with General Motors' (GM) all-new Hummer, Ford's (F) stalwart F-150, Tesla down the road, and on a path to disrupt the auto industry over the next decade. With over $10B in funding before going public and Amazon as a 20% owner, a vertically integrated process, 48,000 pre-orders for the R1 platform and a stable 100,000 unit delivery partnership with Amazon on the commercial front, Ives believes Rivian has the potential to become one of the leaders in the electric vehicle industry over the next decade. With the popularity and consumer demand for EVs on the trucking/SUV market, he thinks Rivian is in "the catbird's seat" to take considerable market share in this EV arms race under its "visionary" CEO and founder RJ Scaringe.
Additionally, Baird, Piper Sandler, RBC Capital, Mizuho, Bank of America, Wolfe Research, and Deutsche Bank initiated coverage of Rivian with Buy-equivalent ratings.
ON THE SIDELINES: More cautious on the name, Wells Fargo analyst Colin Langan initiated coverage of Rivian with an Equal Weight rating and $110 price target. The analyst noted the market is charged up on Rivian, with the stock rising 34.2% since its listing, and there is much to get investors excited. The R1S & R1T are exciting and compelling products, with over 55,000 of orders in a growing SUV segment, and the company has a comprehensive strategy to own and profit from its customer over the vehicle's life, Langan added. Moreover, the cadence of product introductions is rapid, with three launches before year-end, a faster pace than EV leader Tesla, the analyst contended. However, Langan argues that the stock is pricing in 2.2M vehicles in 10 years, in line with global luxury leaders. While this is possible, it also leaves little room for error for a company with almost no manufacturing record, the analyst notes.
Goldman Sachs analyst Mark Delaney also started coverage of Rivian with a Neutral rating and $94 price target. Rivian has an attractive product set and a growing brand presence but the automotive industry has been historically difficult for new entrants to scale, including in electric vehicles, Delaney told investors in a research note of his own. In addition, Rivian's vertical integration model is expensive, said the analyst, who projects about $20B of cash burn from Q4 of 2021 through 2025. Delaney added that the stock "already trades at a sizable premium to the group median."
Meanwhile, JPMorgan analyst Ryan Brinkman initiated coverage of Rivian with a Neutral rating and $104 price target. The analyst noted that the company beat Tesla, Ford, and GM to market with the industry's first battery electric pickup truck and its execution risk "appears mitigated substantially" by a talented and experienced management team. However, Rivian's valuation is "clearly already pricing in a lot" after the recent rise in the shares, the analyst argued.
PRICE ACTION: In Monday morning trading, shares of Rivian gained almost 5% to $109.42. Rivian Automotive opened for trading at $106.75 on November 10 after the company had priced 153M shares at $78 in its initial public offering.