Needham raises estimates, praising Rivian's (RIVN) performance ahead of 2Q report

July 27, 2023 8:23 AM EDT
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Needham reiterated a Buy rating on Rivian Automotive (NASDAQ: RIVN) and raised their 12-month price target on the company’s stock to $31.00 (From $28.00) ahead of the automaker’s 2Q earnings report. Rivian is expected to release their 2Q results on Tuesday, August 8th.

Needham conducted a weekly evaluation of Rivian via their EV OEM Used Vehicle Price Tracker. Analyst Chris Pierce reported that the investigation revealed a lower total number of used vehicles available for re-sale, even though a comparable amount of R1T pickup trucks were sold in relation to Ford F150 Lightning EVs. The check also revealed that Rivian scores better in new listings and that their used-vehicle prices have shown less depreciation.

“RIVN's competitive advantages are shining brighter,” writes Pierce, “with the company emerging as a demand creator when considering that the majority of its buyers have never previously purchased a pickup truck.”

“RIVN's combination of solid demand and ramping vehicle production, as well as detailed per-vehicle cost savings increase our confidence in our long-term estimates” Pierce added.

For the company’s 2Q earnings report, Needham expects the automaker will likely play it safe. Analyst Pierce isn't banking on a bump in the 2023 production forecast. There might be a pleasant surprise in the profit margins due to more vehicles being produced and delivered vs consensus estimates, driving higher fixed cost absorption. With Rivian cranking up production and doing more in-house, we could see even more improvements. Needham sees investors growing more confident in Rivian's long-term predictions, and thinks that the general consensus will start leaning closer to their guess for the 2027 adjusted EBITDA.

Shares of RIVN are up 3.98% in pre-market trading on Thursday.

By Michael Elkins | [email protected]

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