It is time to step to the sidelines on Rivian Automotive , in keeping with RBC Capital Markets. Analyst Tom Narayan downgraded Rivian to sector carry out from outperform, saying the once-hot electrical automobile inventory has restricted catalysts within the close to time period. “RIVN is nicely positioned to seize market share because the business shifts in the direction of electrification, and we proceed to consider its clean-sheet method and vertical integration will permit for increased margins at scale,” Narayan stated to shoppers on Tuesday. “R2 [vehicle] reveal and manufacturing ramp might help sentiment, however near-term we see restricted catalysts to speed up profitability and consider margins will stay constrained,” he added. Moreover, the analyst halved his value goal on Rivian to $14 from $28. The brand new value goal is simply barely increased than the place shares closed Tuesday, at $13.43. The inventory was down 2% in Wednesday’s premarket. RIVN YTD line Rivian inventory motion Rivian made one of many greatest public debuts in November 2021 when its implied valuation of $86 billion pushed the electrical automobile maker previous the market cap of Ford. At the moment, nevertheless, Rivian’s market cap stands at roughly $12.4 billion. The inventory is down 27% this yr, and tumbled 82% in 2022, as rising rates of interest and surging inflation soured traders on the prospects of start-ups. The analyst expects that Rivian’s margins are bettering however stated the corporate can do little to enhance on fastened prices, citing restricted entry to energy semiconductors this yr. “Mounted value overhead is the one largest driver for margin enchancment, representing 2/3rds of the general bridge to gross margin enlargement, however that is the place we consider there may be restricted capability to speed up past present plan,” Narayan wrote. “RIVN is constrained on energy semiconductor availability this yr and whereas they’ve taken motion to assist mitigate the state of affairs (added to provider base and reduce variety of modules wanted in a automobile), we consider upside to the 50k manufacturing goal is restricted (we mannequin 51.9k),” the analyst added. —CNBC’s Michael Bloom contributed to this report.
