Rivian Automotive (NASDAQ: RIVN) obtained a number of downgrades from analysts within the wake of its fourth-quarter earnings report launched on Feb. 21. Income greater than doubled final yr, however rising rates of interest are beginning to take a toll on electrical automobile (EV) demand. Administration expects manufacturing in 2024 to be flat yr over yr at 57,000 models.
Morgan Stanley minimize its worth goal on the inventory to $14 from $24. The brand new worth goal is 26% greater than Rivian’s present share worth. Regardless of the unfavorable sentiment across the inventory proper now, Morgan Stanley continues to be optimistic about Rivian’s future, because it maintained an chubby (purchase) score on the inventory.
Why Wall Avenue analysts stay bullish on Rivian’s long-term prospects
The common analyst advice nonetheless has a purchase score on the inventory. Optimism on the corporate’s future relies on Rivian’s rising model in electrical automobiles and complicated on-line automotive shopping for expertise. It additionally continues to be backed by Amazon, which held 158 million shares of Rivian class A standard inventory on the finish of 2023.
Automobile gross sales are at all times going to fluctuate with the course of rates of interest, however the actual motive buyers are souring on Rivian is that the corporate is dropping some huge cash. It must scale up its automobile manufacturing to leverage its price construction and switch a revenue. However Rivian’s adjusted free money move was unfavorable $1.4 billion within the fourth quarter, which was better than the $1.3 billion it generated in income.
Wall Avenue’s short-term focus should not imply a lot to long-term buyers, however analysts’ opinions can considerably impression the sentiment across the inventory worth. Rivian’s weak outlook means the inventory is not more likely to rebound till rates of interest come down, or the corporate exhibits enchancment in bringing prices down.
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Rivian Automotive Inventory Has 26% Upside, Based on This Wall Avenue Analyst was initially printed by The Motley Idiot