Rivian Automotive Inc.’s stock (RIVN, +3.91%) experienced a rise of 2.6% in early trading on Tuesday following an upgrade to a buy recommendation by UBS. Despite a slight reduction of $2 in the price target, now set at $24 per share, UBS analyst Joseph Spak expressed optimism about the future prospects of the electric-vehicle manufacturer.
Positive outlook after recent developments
Spak noted that Rivian’s stock had declined by 20% since October 4th, but highlighted the company’s successful issuance of a $1.5 billion green convertible note as a turning point. He stated that now that the fundraising is complete, the market can shift its attention back to the company’s improving fundamentals.
Mitigating concerns and reducing risk
Spak acknowledged that while production and deliveries for the first quarter of 2024 may fluctuate due to plant re-rating, the lower stock price helps alleviate some of these concerns. Additionally, Rivian appears to be managing its cash flow at a slower pace, which is seen as a positive development.
Brighter days ahead
In conclusion, Spak emphasized his belief in the likelihood of achieving a positive gross margin in the last quarter of 2024. He considers this a potential catalyst for further growth and expressed confidence that the road ahead for Rivian looks brighter.