Stock Markets

Rivian downgraded to Sector Perform at RBC Capital on limited near-term catalysts

© Reuters Rivian (RIVN) downgraded to Sector Perform at RBC Capital on limited near-term catalysts
Add to/Remove from Watchlist

Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio


By Michael Elkins 

RBC Capital downgraded Rivian Automotive (NASDAQ:RIVN) to a Sector Perform rating (From Outperform) and cut their price target on the stock to $14.00 (From $28.00) as RBC analysts believe the company’s near-term catalysts are limited.

The analysts wrote in a note, “RIVN is well positioned to capture market share as the industry shift towards electrification, and we continue to believe its clean-sheet approach and vertical integration will allow for higher margins at scale. R2 reveal and production ramp can help sentiment, but near-term we see limited catalysts to accelerate profitability and believe margins will remain constrained.”

Fixed cost overhead is the single largest driver for margin improvement. RIVN is constrained on power semiconductor availability this year and while they have taken action to help mitigate the situation (added to supplier base and cut number of modules needed in a vehicle), The analysts believe upside to the 50k production target is limited (RBC models 51.9k).

Other drivers of margin improvement are cost reductions from the introduction of new technology and the positive impact of price increases from the move beyond March 2022 preorders, induction of higher priced variants, and IRA regulatory production credits. However, RBC Capital believes these are already accounted for in consensus expectations, and the ability to realize these benefits sooner is limited by supply chain.

Shares of RIVN are down 2.62% in pre-market trading on Wednesday.

Marketmind: Crowded bonds unnerved

Previous article

GE’s largest union ratifies 2-year contract extension with wage hike

Next article
As a seasoned financier, I have a keen eye for identifying profitable investment opportunities and creating strategic financial plans. My expertise in risk management and financial analysis has enabled me to deliver exceptional returns for my clients and stakeholders.

You may also like

Leave a reply

Your email address will not be published. Required fields are marked *