Truist analyst Jordan Levy launched coverage of Rivian (ticker: RIVN) on Wednesday with a Buy rating and $65 price target. That is up almost 100% from recent levels.
Levy calls the company a “diversified mobility tech powerhouse,” noting that it makes pickup trucks and commercial vehicles and has aspirations to generate subscription-type revenue from internally generated software products.
He’s bullish on the future. At $65 a share, Rivian’s market capitalization would be roughly $60 billion, about 30% higher than
Ford
’s
current market cap of about $46 billion.
Ford Motor
(F) is an apt comparison because commercial vehicles, desirable pickup trucks, plus mobility and software business aspirations pretty much describes the company’s strategy to a (Model) T.
Ford, of course, is far larger than Rivian. Sales this year are expected to be about $148 billion with about $6 billion in free cash flow generated. Rivian, on the other hand, is expected to generate about $2 billion sales and burn through about $7 billion in cash.
The raw financial comparison isn’t really fair, though. Ford is 119-years old, hasn’t really grown sales for years and has a legacy gasoline-powered business that is being threatened by EV penetration of new car sales.
Still, Ford recognizes all that and is shifting aggressively toward EVs. Ford has, very likely, sold just as many electric pickup trucks as Rivian in 2022. (Rivian and Ford don’t report deliveries with the same frequency.) Ford also has investments in self-driving start-ups and is selling services to commercial customers that do things such as track engine idle time.
Levy doesn’t cover Ford stock. But the average analyst price target for Ford shares is $16.77, according to Bloomberg. That would make Ford stock worth roughly $60 billion. The average analyst price target for Rivian shares is about $51, lower than Levy’s number. That would translate to a Rivian market cap of about $46 billion.
Overall, the Street still thinks Ford is worth more than Rivian—but not by much.
Growth and disruption are the biggest reasons. Rivian sells only electric vehicles, while Ford has to manage the epic shift from gas to battery power. But investors shouldn’t dismiss the idea that Rivian is viewed as a growth stock and held by growth investors. That group simply pays attention to different metrics than value investors.
Rivian stock was down 6% in midday trading. Despite the bullish call, shares were unable to overcome overall market sentiment. The
S&P 500
and
Dow Jones Industrial Average
had dropped 2.3% and 1.8%, respectively.
With the new rating, about 62% of analysts covering Rivian stock rate shares Buy. The average Buy-rating ratio for stocks in the S&P 500 is about 58%. Only 40% of analysts covering Ford stock rate shares Buy.
Write to Al Root at [email protected]
Rivian Gets Another Buy Rating. Why Analysts Are Overlooking Ford.
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Rivian and Ford have a lot of strategic similarities.
Courtesy Rivian
Electric truck maker
Rivian Automotive
picked up a new Buy rating, but the optimism for leading EV start-up stocks just won’t spill over to the traditional auto industry.
Truist analyst Jordan Levy launched coverage of Rivian (ticker: RIVN) on Wednesday with a Buy rating and $65 price target. That is up almost 100% from recent levels.
Levy calls the company a “diversified mobility tech powerhouse,” noting that it makes pickup trucks and commercial vehicles and has aspirations to generate subscription-type revenue from internally generated software products.
He’s bullish on the future. At $65 a share, Rivian’s market capitalization would be roughly $60 billion, about 30% higher than
Ford
’s
current market cap of about $46 billion.
Ford Motor
(F) is an apt comparison because commercial vehicles, desirable pickup trucks, plus mobility and software business aspirations pretty much describes the company’s strategy to a (Model) T.
Ford, of course, is far larger than Rivian. Sales this year are expected to be about $148 billion with about $6 billion in free cash flow generated. Rivian, on the other hand, is expected to generate about $2 billion sales and burn through about $7 billion in cash.
The raw financial comparison isn’t really fair, though. Ford is 119-years old, hasn’t really grown sales for years and has a legacy gasoline-powered business that is being threatened by EV penetration of new car sales.
Still, Ford recognizes all that and is shifting aggressively toward EVs. Ford has, very likely, sold just as many electric pickup trucks as Rivian in 2022. (Rivian and Ford don’t report deliveries with the same frequency.) Ford also has investments in self-driving start-ups and is selling services to commercial customers that do things such as track engine idle time.
Levy doesn’t cover Ford stock. But the average analyst price target for Ford shares is $16.77, according to Bloomberg. That would make Ford stock worth roughly $60 billion. The average analyst price target for Rivian shares is about $51, lower than Levy’s number. That would translate to a Rivian market cap of about $46 billion.
Overall, the Street still thinks Ford is worth more than Rivian—but not by much.
Growth and disruption are the biggest reasons. Rivian sells only electric vehicles, while Ford has to manage the epic shift from gas to battery power. But investors shouldn’t dismiss the idea that Rivian is viewed as a growth stock and held by growth investors. That group simply pays attention to different metrics than value investors.
Rivian stock was down 6% in midday trading. Despite the bullish call, shares were unable to overcome overall market sentiment. The
S&P 500
and
Dow Jones Industrial Average
had dropped 2.3% and 1.8%, respectively.
With the new rating, about 62% of analysts covering Rivian stock rate shares Buy. The average Buy-rating ratio for stocks in the S&P 500 is about 58%. Only 40% of analysts covering Ford stock rate shares Buy.
Write to Al Root at [email protected]
Source: https://www.barrons.com/articles/rivian-stock-ford-evs-51664473094?siteid=yhoof2&yptr=yahoo