Why Rivian Stock Popped Tuesday

One Wall Street analyst sees more than 60% upside for Rivian stock.

Shares of Rivian Automotive (RIVN 8.27%) jumped today after one Wall Street analyst began coverage and reinforced some positive projections from the electric vehicle (EV) maker. Rivian’s management has previously said it expects to achieve positive gross profit in the fourth quarter.

Investors reacted to the new analyst coverage positively. Rivian shares were popping higher by 7.3% as of 2 p.m. ET.

Buy Rivian ahead of its Investor Day

The company is holding its 2024 Investor Day later this week. Ahead of that meeting, Guggenheim analyst Ronald Jewsikow initiated coverage on Rivian with a buy rating and an $18 price target. That would represent a gain of 63% from Monday’s closing share price.

Jewsikow wrote that he sees a “credible path” for Rivian to reach its goal for breakeven gross profit margin in the fourth quarter. He believes that, and improving profitability from there, will be a catalyst for the stock.

The analyst wrote that he is recommending the stock now because his firm’s analysis of unprofitable large-cap stocks showed that investors can achieve outsize gains when “buying before breakeven EBITDA [earnings before interest, taxes, depreciation, and amortization].”

Rivian doesn’t expect to increase production volume in 2024 versus last year. But that’s partly because it is retooling its factory to prepare for its next-generation R2 vehicle platform. Sales of its R2 pickup truck and SUV models are expected to begin in 2026 and will be critical for the company to become consistently profitable.

In the meantime, Rivian has also revamped its R1 platform with software improvements and performance upgrades. Its new drive unit will provide improved power, performance, and range. Investors will hear more from the company after its Investor Day presentation this Thursday, June 27.

Howard Smith has positions in Rivian Automotive. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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