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Rivian: UBS Upgrade Signals Potential 40% Stock Gain
2 Nov
Summary
- UBS upgraded Rivian Automotive stock to buy, predicting a 40% upside.
- The EV maker's R2 vehicle ramp and improving gross margins are key drivers.
- Global EV demand saw a 2% dip in September, impacting Rivian's growth.
Investors are advised to consider Rivian Automotive shares after a recent decline, as UBS has upgraded the electric vehicle stock from neutral to buy. The bank has set a price target of $17 per share, indicating a potential 40% increase from recent closing prices.
UBS analysts view the recent stock sell-off as a prime buying opportunity, especially with the anticipated inflection in the R2 vehicle ramp and gross margins. Initial demand for the R2 model appears robust, which is a positive sign for future trim level releases. As the R2 production scales up, Rivian is expected to see a favorable shift in its automotive gross margins.
Despite a recent slowdown in the electric vehicle market, which saw global demand fall by 2% in September, UBS forecasts that Rivian will achieve positive auto gross margins by the close of this year. The company's software and services division, known for its high margins, is also progressing well and could support further growth initiatives.
