Actions of Rivian Automobile (NASDAQ:RIVN) surged today after a Wall Street analyst began coverage and reinforced some positive projections from the electric vehicle (EV) maker. Rivian management previously said it expected to post positive gross profit in the fourth quarter.
Investors reacted positively to the new analyst coverage. Shares of Rivian were up 7.3% as of 2 p.m. ET.
Buy Rivian before its investor day
The company is hosting its 2024 Investor Day later this week. Ahead of this meeting, Guggenheim analyst Ronald Jewsikow initiated coverage on Rivian with a buy rating and a price target of $18. That would represent a 63% gain from Monday’s closing price.
Jewsikow wrote that he saw a “credible path” for Rivian to achieve its goal of breakeven gross profit margin in the fourth quarter. He believes improving profitability from here 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 has shown that investors can make outsized gains by “buying before the EBITDA breakeven point.” (earnings before interest, taxes, depreciation and amortization)”.
Rivian doesn’t expect to increase production volume in 2024 compared to last year. But that’s partly because it’s retooling its factory to prepare for its next-generation R2 vehicle platform. Sales of its R2 pickup and SUV models are expected to begin in 2026 and will be critical to the company becoming consistently profitable.
Meanwhile, Rivian has also revamped its R1 platform with software improvements and performance upgrades. Its new drive unit will offer improved power, performance and autonomy. Investors will learn more about the company following its Investor Day presentation this Thursday, June 27.
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Howard Smith holds positions at Rivian Automotive. The Motley Fool has no position in any of the securities mentioned. The Motley Fool has a disclosure policy.
Why Rivian Stock Broke Tuesday was originally published by The Motley Fool
