Traders had blended reactions when Rivian Automotive (NASDAQ: RIVN) reported third-quarter outcomes final week. The monetary outcomes had been disappointing, with decrease income and the next reported loss than anticipated. However the electric vehicle (EV) start-up reaffirmed its supply expectations for the total yr, despite the fact that provide chain points have not too long ago impacted manufacturing and its funds.
After digesting this newest information, one Wall Road analyst felt the blended outcomes nonetheless meant traders would do properly to purchase Rivian shares now. Canaccord Genuity analyst George Gianarikas referred to as the report a “messy” one however famous that “it wasn’t all unhealthy.” It was the constructive facet that he thinks means probably the most for traders proper now, and there was even higher information from Rivian after it reported outcomes.
An actual path to profitability
Rivian has been restrained from rising manufacturing charges for a number of causes. It has been retooling to arrange its manufacturing plant for the approaching manufacturing of its next-generation EV platform subsequent yr. Extra not too long ago, it mentioned it needed to gradual manufacturing as a consequence of an element provide difficulty.
In line with stories, Gianarikas nonetheless thinks traders should purchase the inventory, saying, “To our (nice) shock, administration reiterated that it expects to achieve gross margin constructive in [the fourth quarter].” The analyst dropped his price target on the inventory from $28 however nonetheless thinks it’s price $23 per share. That may suggest an upside of greater than 100% from current ranges over the subsequent 12 months.
Rivian maintained its manufacturing forecast for the yr and expects to achieve a positive gross margin for the primary time within the present quarter, supporting the bullish case.
Subsequent to the report, Rivian gave traders even higher information relating to its future prospects. It closed on a beforehand introduced cope with Volkswagen (OTC: VWAGY). The worldwide automaker is investing straight in Rivian, and the businesses are forming an EV expertise three way partnership. The deal’s $5.8 billion worth was greater than the $5 billion preliminary estimate.
That bodes properly for Rivian’s long-term prospects and makes the analyst name to purchase the inventory right here a sound one.
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Howard Smith has positions in Rivian Automotive. The Motley Idiot recommends Volkswagen Ag. The Motley Idiot has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the creator and don’t essentially replicate these of Nasdaq, Inc.
