Upgrade by D.A. Davidson’s Michael Shlisky comes after entry into Europe comes much earlier than expected
Shares of Rivian Automotive Inc. shot toward a nearly five-month high Wednesday, after the electric-vehicle maker’s entry into Europe through Amazon.com Inc. prompted the most bearish analyst to back away from a sell recommendation.
Analyst Michael Shlisky raised his rating on Rivian’s stock RIVN, +4.45% to neutral from underperform and boosted his stock-price target to $18 from $11. His previous price target was the lowest of the 24 analysts surveyed by FactSet who cover Rivian.
Shlisky said his decision to upgrade the stock comes after the “cadence of headline” has begun to shift more positive.
“The most recent on [Rivian’s] imminent entry into Europe with its delivery van was expected eventually, but [has come] far earlier than we anticipated,” Shlisky wrote in a note to clients.
Rivian’s stock rallied 6.1% in premarket trading, putting it on track to open at the highest price seen since mid-February. That rally also puts it on course for a sixth straight gain, which would represent the stock’s longest win streak since an eight-day stretch that ended Sept. 14, 2022.
Amazon AMZN, +0.12% announced late Monday that the first of its new electric delivery vans made by Rivian will be arriving in Europe, with the first rollout in Germany. The e-commerce giant said more than 300 electric last-mile delivery vans would be coming to Germany in the coming weeks.
Shlisky said that while his conversations with some industry experts indicated they were critical of the design of Rivian’s electric delivery vans for use in the U.S., the smaller body and reduced-cargo-capacity version of the vans “could work in Europe.”
The Amazon announcement followed Rivian’s report early Monday that second-quarter production more than tripled from a year ago, while deliveries nearly tripled. That had sent the stock soaring more than 17% on Monday, the biggest one-day gain in eight months.
Amazon’s stock eased 0.5% ahead of Wednesday’s open. Amazon is Rivian’s largest shareholder, with a stake of 158.4 million shares, or 17% of the shares outstanding.
Shlisky added that Rivian’s purchase of Sweden-based mapping company Iternio, the developer of an app called A Better Route Planner, or ABRP, should improve the in-cabin experience for users of Rivian vehicles.
“More importantly, in our view, the data from the app cuts across brands and may help RIVN with product planning, marketing, and other key aspects of its strategy,” Shlisky wrote.
Shlisky said he still doesn’t recommend investors buy Rivian’s stock, however, as he believes the company is still dealing with supplier change-overs and ramp-up challenges, and could face increased cancellations and production-backlog mismatches.
“The mixed narrative keeps us from recommending the stock at the moment,” Shlisky said.
The stock has run up 33.7% over the past three months through Monday, while the Global X Autonomous and Electric Vehicles exchange-traded fund DRIV, -0.61% has advanced 15.7% and the S&P 500 index SPX, -0.20% has gained 8.9%.