EV Rivian (RIVN) Shares Dip as Street Starts New Coverage With Mixed Ratings, Goldman Sachs and JPMorgan Initiate at Neutral Citing Lofty Valuation

December 6, 2021 6:49 AM EST
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Price: $79.95 --0%

Rating Summary:
    11 Buy, 4 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 0 | Down: 0 | New: 1
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Shares of Rivian (NASDAQ: RIVN) are down about 1.5% in pre-open Monday after Wall Street analysts initiated research coverage of the EV company.

In the most successful IPO since 2014, Rivian went public last month after it sold 153 million shares at $78.00 each to value the EV company at $66.5 billion. However, shares opened at $106.75 on November 10 before closing at $106.75.

On Friday, Rivian share price closed at $104.67 which translates into an $89.27 billion valuation. Rivian raised almost $12 billion that will be used to further fuel growth.

Today, at least 12 Wall Street analysts started research coverage of Rivian with 8 ratings being Buy or equivalent while four firms - including Goldman Sachs and JPMorgan - started at Neutral.

Piper Sandler analyst Alexander Potter initiated research coverage of EV Rivian with an Overweight rating and a $148.00 per share price target.

“Lots of companies say they intend to replicate Tesla's success, but in our view, most of these companies will fail. This is because they rely too heavily on supply chain partners, and they lack the expertise (and the courage) to develop their own software, semiconductors, batteries, charging networks, and direct-to-consumer business models. Rivian's management team understands this, and as a result, has chosen to exploit the advantages of vertical integration. Until the supply chain matures, we think companies using this strategy will have the upper hand,” Potter said in a client note.

On the other hand, Goldman Sachs analyst Mark Delaney started at Neutral with a $94.00 per share price target. The analyst believes that Rivian has an “attractive product set,” which relates to the full ecosystem.

However, Delaney also discussed concerns that pushed him to stay on the sidelines.

“We expect Rivian's ecosystem and full set of solutions will not only help the company to have strong product traction, but also allow for recurring revenue opportunities. The company's use of modular EV platforms with a significant amount of parts overlap, will allow for cost and operational leverage. However, the automotive industry has been historically difficult for new entrants to scale, including in EVs. In addition, Rivian's vertical integration model is expensive, and we project about $20 bn of cash burn from 4Q21 through 2025. Finally, the stock already trades at a sizable premium to the group median,” Delaney wrote in his report.

Still, the analyst acknowledges that EV Rivian shares may surprise to the upside in the next 12-18 months “if the company executes well on its product ramps.” This is despite a price target that implies a downside from the current price of Rivian shares.

The average price target on Rivian shares is $134.42, which implies an upside of nearly 30% compared to Friday’s closing price.

The Street-high price target on Rivian stock is set by BofA analyst John Murphy ($170.00).

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