Rivian (RIVN 6.10%) has been perhaps the most successful of the wave of electric vehicle (EV) start-ups that went public earlier in the decade. But it isn't immune from the broader market forces that have slowed the growth of EV sales and put pressure on EV makers.
Those forces led a Mizuho Financial Group analyst to cut the bank's rating on Rivian to "neutral" from "buy" on Sunday and to cut its price target on the stock as well.
Why this Wall Street analyst cut Rivian to "neutral"
While Mizuho analyst Vijay Rakesh thinks that widespread EV adoption is still likely in the long term, there are near-term concerns about consumer demand -- and with companies like Rivian, which isn't yet profitable, about the rising cost of funding. Rakesh wrote that the bank's team now sees overall EV sales growth rising just 15% year over year in 2024, down from 25% in their earlier forecast.
Rakesh sees the EV market's growth rebounding once new lower-cost models arrive in a couple of years. With Rivian's own lower-cost R2 model due in 2026, that may provide some support for the roughly 13% upside over the next 12 months or so built into his $12 price target for the stock.
Rivian is a good company facing a challenging moment
For the most part, Rivian CEO R.J. Scaringe and his team have done a superb job ramping up production and sales of the company's vehicles. While the current market is presenting headwinds, this a company that won a lot of credibility by delivering over 50,000 vehicles last year -- and its cash reserve, $10.4 billion as of the end of 2023, should buy it enough time to get the R2 launched.
I think Mizuho's "neutral" rating on Rivian is about right. If you buy it here you'll probably need patience. But if you already own shares, I'd hang on.
