Needham Bullish on Rivian as R1T Demand Surges
Investment banking firm Needham has reiterated its Buy rating and set a price target of $25.00 for Rivian Automotive Inc. (NASDAQ: RIVN) after conducting a survey on R1T inventory and updating its Used Vehicle Price Tracker. The survey results have strengthened Needham’s confidence in the demand for Rivian’s R1T electric pickup truck, as well as its sister model, the R1S SUV.
Positive Q4 Data Signals Manufacturing Growth for Rivian
Needham analysts are optimistic about Rivian’s performance in the fourth quarter, citing the company’s impressive progress in sequential production as a promising indicator of its manufacturing growth. Despite concerns about the shutdowns in the ’24 R1 production line, Rivian has managed to maintain strong production numbers, which bodes well for its overall expansion and market presence.
Strong Deliveries Expected to Boost Rivian’s Q1 Performance
Rivian has exceeded Needham’s delivery expectations, which has further bolstered confidence in the company’s performance. Needham analysts anticipate that the significant gap between production and deliveries will lead to an upward revision of the consensus Q1 2024 delivery estimate. This positive development is expected to drive Rivian’s stock performance in the first half of the year, shifting attention away from concerns about the second-half gross margin.
Concerns Arise Over R1T Inventory and Represented Demand
Despite its bullish outlook, Needham does express some concerns regarding the representation of demand through R1T inventory levels. After analyzing Rivian’s inventory in late December and early January, the investment firm found approximately 600 available R1T units. Based on historical registration numbers, Needham estimates that Rivian delivers around 20 vehicles per day, indicating a 30-day supply of R1T inventory. This puts Rivian ahead of other car manufacturers in terms of supply days, even before factoring in potential supply constraints for the R1S model.
RIVN Stock Marginally Up in Pre-Market Trading
In pre-market trading on Tuesday, shares of Rivian (RIVN) saw a modest increase of 0.05%. Despite the ongoing concerns regarding R1T inventory and supply, this marginal upward trend suggests that investors may be cautiously optimistic about the company’s future prospects. Rivian’s strong performance in the electric vehicle market has captured the attention of investors and industry observers alike, positioning the company as a serious contender in the rapidly evolving automotive industry.
Overall, Needham’s bullish stance on Rivian is driven by the strong demand for the R1T and R1S models, positive Q4 performance, and expectations of robust deliveries. However, the inventory levels and concerns related to represented demand warrant further analysis and monitoring. Rivian’s stock performance in the pre-market trading indicates some investor confidence, although the company still faces challenges in balancing supply and demand effectively.
Analyst comment
Positive
