Rivian Automotive (RIVN) got an upgrade Tuesday from UBS analyst Joseph Spak. He moved his position on the stock from hold to buy, and yet he lowered his price target from $26 to $24.
This came after the company raised a whopping $1.5 billion on October 5 – something that caught investors and Wall Street analysts alike off guard. Shares closed at around $18.78 after the trading session that Monday, taking quite a step back from where they stood in September at around $24.
This is where Spak sees value – as the stock is now undervalued at its current price. This is coupled with the fact that the company is only getting stronger as production and sales ramp up.
In fact, he believes that the company is poised to deliver an earnings beat for the full year of 2023. He’s forecasting 55,000 units of production compared to the company’s guidance of 52,000 units.
Looking at Rivian now, all signals seem to be pointing toward “buy”. The stock sits at a more attractive price than it has in a while after losing 24% of its value in the past 3 months alone. This is coupled with solid fundamentals.
And yet, the stock is down nearly 2% today after getting the upgrade. The fact of the matter is that the EV market is being hit by sky-high interest rates that are deterring new vehicle purchases. This, paired with more EV competition than ever before, has left Rivian in a tough spot.
That being said, should you follow Spak’s call and buy RIVN? VectorVest isn’t convinced that now is the time. In fact, the system is showing the exact opposite stance – rating RIVN a sell. We’ll show you three reasons why below.
Despite Fair Upside Potential, RIVN Has Poor Safety and Timing
VectorVest is a proprietary stock rating system that has outperformed the S&P 500 index by 10x over the past 20 years and counting. It does this while empowering investors to spend less time in front of screens.
How does it work? You’re given all the insight you need to make clear, calculated decisions through 3 simple ratings: relative value (RV), relative safety (RS), and relative timing (RT).
Each sits on its own scale of 0.00-2.00 with 1.00 being the average. This makes interpretation quick and easy. But, you’re also given a buy, sell, or hold recommendation for any given stock at any given time. As for RIVN, here’s the current situation:
- Fair Upside Potential: The RV rating compares a stock’s long-term price appreciation potential to AAA corporate bond rates and risk. It offers far superior insights than a simple comparison of price to value alone. Right now, the RV rating of 0.92 is deemed fair for RIVN. That being said, the stock is overvalued with a current value of just $13.41.
- Poor Safety: The RS rating is an indicator of risk. It comes from an analysis of a company’s financial consistency & predictability, debt-to-equity ratio, and business longevity. As for RIVN, the RS rating of 0.69 is poor.
- Poor Timing: As you can see by looking at the stock’s performance in both the short and long term, RIVN has poor timing. This is reflected in an RT rating of 0.56. The rating is based on the direction, dynamics, and magnitude of the stock’s price movement day over day, week over week, quarter over quarter, and year over year.
The overall VST rating of 0.72 is poor for RIVN, and is why VectorVest deems this stock a sell. Learn more about how the VectorVest system works and about RIVN itself through a free stock analysis today!
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VectorVest advocates buying safe, undervalued stocks, rising in price. While one UBS analyst says RIVN is a buy, VectorVest says it's time to sell. The stock has fair upside potential but is still overvalued. It has poor safety and timing holding it back as well.
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