1 Wall Street Analyst Thinks Rivian Stock Is Going to $23. Is It a Buy at Around $10.50?

Investors had mixed reactions when Rivian Automotive (NASDAQ: RIVN) reported third-quarter results last week. The financial results were disappointing, with lower revenue and a higher reported loss than expected. But the electric vehicle (EV) start-up reaffirmed its delivery expectations for the full year, even though supply chain issues have recently impacted production and its finances.

After digesting this latest news, one Wall Street analyst felt the mixed results still meant investors would do well to buy Rivian shares now. Canaccord Genuity analyst George Gianarikas called the report a "messy" one but noted that "it wasn't all bad." It was the positive side that he thinks means the most for investors right now, and there was even better news from Rivian after it reported results.

A real path to profitability

Rivian has been restrained from growing production rates for several reasons. It's been retooling to prepare its manufacturing plant for the coming production of its next-generation EV platform next year. More recently, it said it had to slow production due to a part supply issue.

According to reports, Gianarikas still thinks investors should buy the stock, saying, "To our (pleasant) surprise, management reiterated that it expects to reach gross margin positive in [the fourth quarter]." The analyst dropped his price target on the stock from $28 but still thinks it is worth $23 per share. That would imply an upside of more than 100% from recent levels over the next 12 months.

Rivian maintained its production forecast for the year and expects to reach a positive gross margin for the first time in the current quarter, supporting the bullish case.

Subsequent to the report, Rivian gave investors even better news regarding its future prospects. It closed on a previously announced deal with Volkswagen (OTC: VWAGY). The global automaker is investing directly in Rivian, and the companies are forming an EV technology joint venture. The deal's $5.8 billion value was higher than the $5 billion initial estimate.

That bodes well for Rivian's long-term prospects and makes the analyst call to buy the stock here a sound one.

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Howard Smith has positions in Rivian Automotive. The Motley Fool recommends Volkswagen Ag. The Motley Fool has a disclosure policy.