Electric vehicle maker Rivian Automotive could be the “next Tesla,” according to Evercore ISI. Analyst Chris McNally upgraded the stock to outperform from in line. He hiked his price target by $5 to $35, which implies shares could jump about 44.2% over the next 12 months. “RIVN has a brand that has stuck the US landing, and most importantly, within segments everyone already wants (SUV, Truck, Van),” McNally said in a Monday note. The analyst named three criteria — a “brand” in building appealing vehicles for consumers, “scale economics” that design EVs with the potential to generate more than 20% in gross margins and “vertical integration” of EV architecture — as qualities that have allowed Tesla and BYD to rake in more than 40% of global neighborhood electric vehicle sales. “We believe outside of Tesla & BYD, Rivian is the only OEM showing increased evidence of meeting all 3 criteria,” McNally said. In the next six months, Rivian could see its stock price boom as its production ramp reaches more than 80,000 units, as the company approaches break-even gross margin in the second quarter of next year, and with the reveal of Rivian’s mid-size CUV/SUV platform R2 in the first half of 2024. He noted that Rivian has executed on its cost and delivery targets, de-risking its path to ending the following year with more than 10% in gross margin. “We are buyers of RIVN at current levels,” McNally said, adding that for the third quarter, the firm expects strong production and deliveries as well as 20% upside to consensus EBITDA on continued gross margin increases. Rivian previously reported a loss for the second quarter that was narrower than expected. — CNBC’s Michael Bloom contributed to the report.
