Buy Rivian now as the stock is poised to surge 85%, Truist says

Published Thu, Sep 29 20227:41 AM EDTUpdated Thu, Sep 29 20228:21 AM EDT

Shares of electric vehicle maker Rivian are set to surge, making now a good time for investors to buy, according to Truist. The firm on Wednesday initiated coverage of the company with a buy rating and a $65 price target. That signals shares could surge 85% from current levels. Shares of Rivian have declined roughly 66% year to date through Wednesday's close. While the company has just started to deliver its first vehicles, it has spent the last decade strategically positioning itself, raising capital and building out its vertically-integrated ecosystem, according to Truist. "As Rivian pushes through the formidable challenges of ramping 4 different vehicles amidst a historically difficult supply chain backdrop, we believe the market will come to see Rivian not just as a successful EV manufacturer with a powerful partner in Amazon, but as a leading example of a next-generation diversified mobility tech powerhouse," wrote analyst Jordan Levy. What sets Rivian apart There are a few key things that Levy sees as positives for Rivian. First is its leadership team, which the firm says shouldn't be overlooked. "Rivian CEO RJ Scaringe has built the company from the ground-up while bringing together a team with expertise spanning the broad range of the company's business segments," Levy wrote. In addition, the company's vertical integration and product differentiation set it apart from competitors. "Controlling the full software & electronics landscape within its vehicles is core to Rivian's business model, and we believe will prove invaluable in the growth of multiple recurring revenue streams," said Levy, adding that this could also boost the company's direct-to-consumer model as all purchases must be made the Rivian's ecosystem. The company also has an advantage in the products that it offers, which has set it ahead of incumbents that will be left playing catch up, according to Levy. "On the consumer side, this means drive modes, infotainment, fun stuff," they said. "On the commercial side it is seamless integration with the company's systems, fleet monitoring & analytics, connectivity." Key partnership Rivian also has a powerful partner in Amazon that provides a strategic advantage over other electric vehicle makers and also gives it a potential edge up against legacy car companies competing in the electric market, according to the note. "We see Amazon's initial purchase of 100,000 EDVs through 2030 underwriting steady growth in RIVN's commercial segment and driving meaningful demand from other fleet owners moving into the latter half of the decade," said Levy.