Rivian Stock Designated as “Fresh Pick” Ahead of Deliveries Report

Baird analyst Ben Kallo has designated Rivian Automotive Inc.’s stock as a bullish “fresh pick” in anticipation of the electric-vehicle maker’s upcoming deliveries report, which he believes will exceed Wall Street forecasts. While Kallo remains optimistic about the stock of EV giant Tesla Inc., he has slightly lower expectations for their third-quarter deliveries compared to the FactSet consensus.

Despite concerns about weakening demand for Rivian, Kallo believes that the underlying demand for their R1S electric sport-utility vehicle remains strong and that production is improving. He expects the deliveries report to serve as a near-term catalyst, improving sentiment as Rivian realizes cost benefits from an improving supply chain and the use of in-house components.

Rivian is expected to release their production and deliveries data around October 3rd, with the FactSet consensus for deliveries estimated at 14,000. Kallo maintains his outperform rating on Rivian’s stock and has set a price target of $30, representing a 42% upside from the previous day’s closing price.

There is some confusion among Wall Street analysts regarding third-quarter deliveries due to planned factory downtime and questions about demand following price cuts. FactSet’s most recent consensus estimate puts deliveries at 462,000 electric vehicles, but estimates range from as low as 438,000 to as high as 511,000. Kallo’s estimate of 439,200 implies a 28% increase from last year, but a 6% decline from the second quarter.

Kallo also mentioned the positive early reviews and strong demand for Tesla’s refreshed Model 3, particularly in China. However, deliveries for the Model 3 are scheduled for early in the fourth quarter.

Rivian’s stock has experienced some volatility recently, with a 17.8% decline in August following a three-month surge where the stock doubled in value. Nevertheless, the stock has rallied 14.7% year to date, while Tesla’s stock has seen a significant increase of 100.5%.

– Baird analyst Ben Kallo
– FactSet consensus estimates

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