Rivian Stock Has Another 25% Upside, According to 1 Wall Street Analyst

Rivian Automotive (NASDAQ: RIVN) shares have been on a tear. The electric vehicle (EV) maker's stock price has rocketed about 36.5% higher in the last month. One Wall Street analyst thinks that's just the start of a rally.

Investors have bid up Rivian shares in recent weeks as the company announced how it plans to spend a big influx in capital it expects to get. The additional capital would bolster the balance sheet for Rivian just as it begins production of its R2 vehicle platform that, as a lower-priced SUV, could meaningfully boost revenue by resonating with a larger base of customers.

That's the crux of why Benchmark stock analyst Michael Legg just initiated coverage on Rivian with a "buy" rating. Legg's $18 price target is based on a level of profitability he believes Rivian can achieve by 2028. If the target is reached over the next year or so, it represents a gain of 25% from Rivian's closing price on Monday.

Critical balance sheet support

Rivian ended the third quarter with about $6 billion in cash and cash equivalents and has as much as $5.8 billion in investments coming from global automaker Volkswagen over the next three years. Additionally, last month the U.S. Department of Energy (DOE) said it planned to provide a conditional loan of up to $6.6 billion for Rivian to help the company construct a second U.S. manufacturing plant.

Legg believes that capital influx is enough for Rivian's business to reach profitability. In his report shared by Barron's this week, he wrote, "Rivian is well-positioned to gain significant share of a massive market opportunity in the coming decade. After a pause this year, domestic EV production is expected to improve in 2025 and further accelerate in 2026 to 2027 as average selling prices decline and the charging infrastructure is built out."

I agree with Legg that it could be a recipe for Rivian to reach profitability and prosper in future years, though investors should consider this an aggressive investment option as both company-specific and macroeconomic risks remain.