UBS Starts Rivian Automotive Inc at Neutral, 'Bumpy path to a better view'

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UBS Starts Rivian Automotive Inc at Neutral, 'Bumpy path to a better view'
Credit: © Reuters.
(Updated - September 13, 2023 6:04 AM EDT)

UBS analyst initiates coverage on Rivian Automotive Inc (RIVN) with a Neutral rating and a price target of $26.00.

The analyst comments "With a focus on electric "adventure" SUV/pickups, we forecast RIVN to grow 2030 deliveries to ~0.5mm units or ~10x 2023E levels. That may still provide room for further growth as the Jeep brand, a good ICE (NYSE: ICE ) comp, has approached close to ~1mm units in the past. However, the larger volumes don't transpire until the back-half of the decade post the launch of their R2 product. This could be their "Model 3" moment in that offering an attractive, more affordable vehicle opens up their market (like when Tesla (NASDAQ: TSLA ) went from Model S/X to Model 3). In the interim, managing the cash burn and getting to positive gross profit are critical. We believe RIVN can get to gross margin positive in 4Q24 (6.5% about inline with consensus) and they have the cash runway until then. However, we forecast $5bn in new capital in 2025 could be needed to fund the next leg of growth."

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