Most Wall Street analysts are still bullish on Rivian after disappointing earnings – but not all

Published Fri, Mar 11 202212:14 PM EST

Rivian Automotive reported a wider-than-expected fourth-quarter loss and slashed its 2022 production guidance by half amid growing concerns about supply-chain issues and rising commodity costs on Thursday. That wasn't quite what investors had hoped to see, and the stock fell over 10% in after-hours trading after the report was released. But was it enough to call the longer-term bull case for the stock into question? Most of the Wall Street analysts who follow the stock remained upbeat on Rivian's longer-term potential after its earnings report. But there were notes of caution, some trimmed near-term price targets – and from a couple of analysts, some deeper reasons for concern. "We continue to believe that to assess Rivian's potential, investors need to look 5 years out" to when the company will likely have at least three factories in operation, Wolfe Research's Rod Lache argued, setting the tone for the bulls. Lache wrote that while the near-term picture is complicated, his bank's revenue and earnings estimates for that further-out time frame remain unchanged. He trimmed Wolfe's near-term price target to $78 from $130 but maintained an outperform rating on Rivian's shares. Bank of America's John Murphy made a similar argument in his post-earnings note. He wrote that the bank's buy rating "is predicated on our view that the company is one of the most viable among the start-up EV automakers" and could become a threat to the established global automakers in time, as well. Murphy left his price target unchanged at $140. RBC Capital Markets' Joseph Spak was even more upbeat, writing that he saw "a number of positives but one large negative" – the supply chain issues – in Rivian's report. "We understand that Rivian needs to show progress on the production ramp and rebuild investor confidence," Spak wrote. "This could take time and Rivian has a very ambitious plan." Spak trimmed RBC's price target for Rivian's shares to $100 from $116 but maintained an outperform rating. He emphasized that "we see a very favorable risk/reward at these levels for investors with patience." Piper Sandler's Alexander Potter might have put it most succinctly. "Bottom line: supply chain problems are temporary; they do not constitute a reason to sell the stock." Potter maintained Piper's overweight rating and price target of $130. Others were less upbeat. Wells Fargo's Colin Langan thinks that the recent surges in the prices of key raw materials like nickel "raises serious issues with [battery electric vehicle] economics" that go beyond 2022. Langan wrote that while Rivian's reduced production guidance for 2022 likely "de-risked" investors' concerns around near-term deliveries, rising raw materials costs, the end of insider share lockups in May and increasing competition in the electric-vehicle space together raise longer-term concerns about the story. He saw no reason to change his previous equal-weight rating despite the stock's recent steep price decline, but he did trim his bank's price target to $40 from $70. Goldman Sachs' Mark Delaney had a similar view. Delaney wrote that rising input costs and lower near-term capex add uncertainty to the timing of Rivian's production ramp beyond 2022. Like Langan, he maintained his bank's previous neutral rating while trimming its price target, in this case to $48 from $90. Rivian's shares traded at $38.53 midday Friday, down 6.4% from Thursday's close and down over 60% since the beginning of 2022. —CNBC's Michael Bloom contributed to this report.

The Rivian R1T on stage as a 2022 Truck of the Year Finalist at the LA Auto Show in Los Angeles, California on November 17, 2021.

Frederic J. Brown | AFP | Getty Images

But was it enough to call the longer-term bull case for the stock into question?