Baird downgrades Rivian on lack of near-term catalysts

Investing.com -- Baird cut its price target for Rivian Automotive Inc (NASDAQ: RIVN) to $16 from $18 given limited catalysts in 2025 and a weaker-than-expected demand environment for electric vehicles.

The brokerage remains positive on Rivian's brand and long-term prospects but expressed skepticism about near-term growth. Rivian’s Q3 results missed expectations, and its lowered production outlook has dampened its ability to offset fixed costs, Baird noted.

“With the Volkswagen (ETR:VOWG_p) JV having recently closed and DOE funding announcement, which was a positive surprise, in the rearview, we see few catalysts in 2025 and expect shares to languish with EV sales, which may be sluggish relative to expectations,” analyst said.

The Volkswagen JV, expected to close before year-end, could provide clarity on partnership terms, but broader EV sales are likely to be sluggish, the firm added.

Baird’s revised price target is based on an 11x multiple of its 2028 EBITDA estimate, discounted back to 2025, reflecting a premium to EV and legacy automakers due to Rivian’s growth potential.

While Rivian’s R2 platform and long-term margin targets remain constructive, the company’s pathway to gross margin profitability by late 2024 will remain a key focus for investors, the note said.

On the other hand, Baird had bumped its price target on rival Tesla (NASDAQ: TSLA) by $200, on 2025 growth catalyst

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