UBS upgraded electric automaker, Rivian (NASDAQ:RIVN) to a Buy rating (from Neutral) but cut their 12-month price target to $24.00 (from $26.00) following the company’s most recent capital raise.
RIVN stock has experienced a decline of around 20% since 10/04. This drop can be attributed to the company's issuance of a $1.5 billion green convertible bond and the impact of higher interest rates for longer durations on both the market and RIVN's valuation.
However, now that the capital raise has been successfully completed, the market can shift its attention back to the company's efforts to enhance its fundamental performance.
“We also see a reduced probability of an additional capital raise over the next ~1 year with capital likely not needed until the end of 2025,” wrote analysts in a note.
UBS is expecting 2023 production of around 54.5k units, surpassing the previously provided guidance of 52k units. Furthermore, they see the possibility of an upward revision when the earnings are released.
Forecasts for the fourth quarter of 2023 stand at 14.8k units, which is lower when compared to 3Q23, which saw production at 16.3k units. This decrease is attributed to a week of downtime scheduled ahead of a plant re-rating planned for 2024, as well as the expected seasonal decrease in demand for vans during that period.
Shares of RIVN are up 3.7% Tuesday morning.