Rivian is now at an attractive entry point for investors after a recent sell-off, according to UBS. The firm upgraded shares of the electric vehicle manufacturer to buy rating from neutral, although it cut its price target to $24 from $26. This new forecast still implies more than 27% upside from Monday’s close of $18.78. Rivian shares are down more than 22% this month after the company said it will over $1.5 billion in convertible green bonds. Disappointing preliminary third-quarter results have also pressured the stock. Analyst Joseph Spak thinks this decline opens up a buying opportunity. “With the raise out of the way, the market can refocus on improving fundamentals. We also see a reduced probability of an additional capital raise over the next ~1 year with capital likely not needed until the end of 2025,” Spak wrote. Spak added that Rivian’s improving fundamentals also make it an attractive buy. The analyst is forecasting Rivian’s 2023 production to settle at around 54,500, above guidance of 52,000 — and still sees the potential for a raise with the earnings release. “While we continue to believe 2024 quarterly production/deliveries can be lumpy owing to plant re-rating, the lower stock price de-risks some of our concerns,” he wrote. “We still believe positive gross margin in 4Q24 is likely and a catalyst.” Finally, Spak noted that Rivian’s promising upcoming products and opportunities could multiply its unit growth 10 times by 2023, driven in part by increasing affordability. Rivian shares are higher by 1.9% for the year. However, they have lost more than 26% over the past three months. RIVN YTD mountain Rivian YTD chart — CNBC’s Michael Bloom contributed to this report.
