Major Wall Street firms remain largely positive on Rivian despite post-earnings sell-off: 'After-hours weakness is noise'

Published Fri, Dec 17 20217:43 AM EST

Shares of Rivian dropped after the electric vehicle start-up's first quarterly report as a public company, but analysts are maintaining a mostly positive view of the stock. Rivian on Thursday said customer reservations surged in the third quarter, but it also cut vehicle production expectations for the year. The company also confirmed plans for a new $5 billion plant in Georgia expected to come online in 2024. Rivian shares retreated more than 7% in the premarket Friday. "We were a bit surprised to see RIVN trading lower," Piper Sandler's Alexander Potter said in a note Thursday, adding that "after-hours weakness is noise." While production is expected to fall a few hundred units short of its 2021 target, Piper Sandler said these numbers are "meaningless" at this stage in the company's development. "In our view, there wasn't enough new information in the Q3 results to warrant a revised thesis, so we're not sure why someone would sell the stock based on these results," Potter said. Piper Sandler maintained an overweight rating on Rivian and a $148 price target on the stock. Rivian's production hiccups do not impact its overall investment case, but show the EV maker "has a lot on its plate," according to RBC Capital Markets' Joseph Spak. The post-earnings dip presents a buying opportunity for long-term investors, Spak advised. "We remain positive on the story and think investors with patience should take advantage of pull-back," Spak said in a Thursday note. RBC has an outperform rating and a $165 price target on the Rivian. While Morgan Stanley said Rivian's quarterly report was in line with the firm's forecasts, analyst Adam Jonas warned investors to keep their outlooks in check as the EV maker scales up. "At the same time, we would encourage investors to keep expectations on ramp and production well managed for the next 12 months at least," Jonas said. Take a look at what analysts at the major Wall Street said about Rivian's quarterly report. Morgan Stanley — Overweight, $147 price target "Rivian 3Q21 numbers were largely in line with our forecasts on opex, operating loss and FCF. We highlight a few high level takeaways. ...It seems Rivian has its sights set on being a very large auto/transportation platform company. Perhaps even larger than we have anticipated. At the same time, we would encourage investors to keep expectations on ramp and production well managed for the next 12 months at least." Bank of America — Buy, $170 price target "Our Buy rating on RIVN is predicated on our view that the company is one of the most viable among the universe of start-up EV automakers and also a relative competitive threat to the universe of incumbent automakers (and possibly to other automotive-related verticals as well)." Goldman Sachs — Neutral, $97 price target "We believe this quarter had several datapoints supportive of our view that there will be strong demand for Rivian's products (e.g., R1 reservations now exceed 70K, and ~90% of R1T customers are first-time truck buyers, which we believe is due in part to the vehicle's handling, speed, and storage, especially amidst the historical lack of EV pickup truck offerings)." JPMorgan — Neutral, $104 price target "Overall, 3Q results were largely uneventful and nonimpactful to the out-year estimates underpinning our unchanged valuation, although updates on a number of other fronts seemed positive in aggregate, including a sizable jump in pre-orders and the sooner than expected announcement of plans to construct the company's second US manufacturing facility." Piper Sandler — Overweight, $148 price target "In our view, there wasn't enough new information in the Q3 results to warrant a revised thesis, so we're not sure why someone would sell the stock based on these results. True, Rivian's production in 2021 will be a few hundred units lower than anticipated, but at this early stage in the company's production ramp, numbers like this are meaningless. If anything, we think an apparently lower-than-expected capex burden for Rivian's second plant (in Georgia) should more than offset any concerns about near-term production choppiness." RBC Capital Markets — Outperform, $165 price target "Demand strong with orders accelerating but production hitting some early bumps. We don't believe this impacts the medium-term investment case, but it does highlight that RIVN has a lot on its plate. Nearterm expectations may come in, which isn't the worst thing, but the stock doesn't have a lot of traditional valuation support and growth having a tougher time in market. We remain positive on the story and think investors with patience should take advantage of pull-back." Baird — Outperform, $150 price target "Rivian's first earnings were marked by a strong uptick in orders, the announcement of a new manufacturing facility in Georgia which will begin production in 2024, and a ~300-unit push-out in manufacturing into 2022 as the company manages a multi-unit product launch during a global supply chain crisis. We continue to see Rivian as a winner in the long-term battle for EV dominance as it brings a unique and powerful cadre of assets to the table." Barclays — Equal weight, $120 price target "With actual earnings less relevant, we expect investor to focus on impressive growth in pre-orders (71k vs 55k on Nov 1), production ramp (a bit slower than hoped) and the nowconfirmed second plant in Georgia. Overall, we expect a positive reaction on the strong pre-order growth." Wells Fargo — Equal weight, $110 price target "More positively, preorders rose to 71k from 48k ending Q3. While the Q4 productiondelay is disappointing, it's hardly a surprise for a startup & does not change our long termview. We remain EW." Mizuho — Buy, $145 price target "Rivian reported in-line SepQ results as the company is in the initial stages of ramping its R1 platform with 652 R1 vehicles produced to date. ... Slightly raising our EPS estimates, trimming revenues; we reiterate our Buy and $145 PT as we see RIVN a leader and pure play in the fast-growing EV market addressing the premium SUV/truck segment." —CNBC's Michael Bloom contributed reporting.

Rivian signage at the Nasdaq on their IPO day, November 10, 2021 in New York.

Source: Rivian

Shares of Rivian dropped after the electric vehicle start-up's first quarterly report as a public company, but analysts are maintaining a mostly positive view of the stock.