As the third quarter comes to a close,
Rivian Automotive
and
Tesla
are both preparing to report delivery numbers. Rivian is going to win this quarter, one analyst believes, at least relative to expectations.
Tuesday, Baird analyst Ben Kallo designated Rivian (ticker: RIVN) stock a “fresh pick.” That’s a time-based call from the broker. Rivian stock can work now. Deliveries are the reasons. “Concerns regarding third-party reports of weakening demand have led to recent weakness in the stock and we believe underlying demand remains strong with production improving,” wrote Kallo. “We see Q3 deliveries as a near-term catalyst and expect sentiment to improve as Rivan continues to realize cost benefits from an improving supply chain and the use of in-house components.”
Rivian stock has fallen about 13% over the past few days as the consensus delivery estimate for the quarter have fallen to 14,000 units from about 15,000, according to FactSet.
Kallo sees a “beat,” but didn’t specify how many vehicles will be delivered in the quarter. Rivian delivered 12,640 vehicles in the second quarter, and generated sales of about $1.1 billion. Kallo projects third-quarter sales of $1.5 billion.
His Rivian stock rating is the equivalent of Buy, and his price target is $30. Rivian stock is down 0.2% in premarket trading at $21.09, while
S&P 500
and
Nasdaq Composite
futures are both off about 0.5%.
Tesla
isn’t going to have as strong a delivery report, according to Kallo. “Planned factory downtime and questions regarding demand have created confusion on the street regarding Q3 deliveries,” wrote the analyst.
His call is for 439,200 vehicles. The consensus call is for 462,000, according to FactSet. That’s a gap of about 23,000 cars. What’s more, Wall Street’s consensus estimate was about 473,000 units just a few weeks ago.
The difference between the top and bottom estimates is some 70,000 units for the third quarter, roughly double the range for the second quarter, according to FactSet. The delivery estimate range is as wide as
Future Fund Active
exchange-traded fund (FFND) cofounder Gary Black can remember. It’s “definitely torturing the stock,” he says.
Tesla stock is down about 11% over the past few days. Lower deliveries are “supply-driven,” adds Black pointing out that the updated version of the Modle 3 isn’t shipping significant volume yet in China and Europe. “Q4 will be 500,000-plus units.”
Kallo is also optimistic about the updated Model 3, one reason for his Buy-equivalent rating on Tesla stock and $300 price target. It’s just not a “fresh pick” for him at this point.
Tesla stock is down 0.7% at $245.30 in premarket trading on Tuesday.
Write to Adam Clark at [email protected] and Al Root at [email protected]
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