Rivian Automotive (RIVN) stock gained on Monday after UBS upgraded the electric-vehicle maker to Buy from Hold, citing improving demand prospects for its R2 models and the potential for higher automotive gross margins.
UBS analyst Joseph Spak maintained his $17 price target, pointing to valuation and the potential for an improvement in Rivian’s business as production of its lower-priced R2 vehicles increases.
Rivian shares rose 10.24% in trading to $13.40, leaving approximately 28% upside to Spak’s price target.
The upgrade comes after the stock declined roughly 38% this year and lost about 19% over the previous month.
The analyst described the recent weakness as a potential buying opportunity ahead of an expected inflection in R2 production and automotive gross margins.
R2 production ramp could support Rivian’s growth
UBS highlighted initial demand for Rivian’s R2 vehicles as an important factor supporting its more positive outlook.
The company recently started selling the lower-priced models, which are expected to increase vehicle volumes and improve gross profit margins as production expands.
Spak said additional R2 variants could broaden the company’s addressable market across different price points, ranges and performance levels, supporting demand beyond early adopters and customers switching from Tesla.
Wall Street expects Rivian’s vehicle sales to reach 207,000 units in 2028, compared with 42,000 in 2025 and an estimated 69,000 in 2026.
Most of the projected 2028 sales are expected to come from R2 vehicles.
UBS also sees opportunities in Rivian’s software and services business.
The brokerage believes higher-margin software revenue could help fund the company’s expansion.
Its Autonomy+ point-to-point driving service could also become a competitor to Tesla’s Full Self-Driving technology in the US.
A planned Autonomy Day in December and an early 2027 customer launch are potential catalysts.
UBS estimates that Rivian has $13 billion in total available and targeted future capital and does not expect the company to require additional funding before 2029.
Wall Street analysts reassess Rivian’s outlook
UBS is not the only brokerage expressing optimism about Rivian’s prospects.
Jefferies upgraded the stock to Buy from Hold while maintaining its $17 price target.
Analyst Philippe Houchois cited stronger-than-expected order conversion for the high-end R2 launch trim and the model’s position in the 45,000-55,000 electric-vehicle segment.
Needham also maintained a Buy rating but reduced its price target to $18 from $23.
The firm noted that R2 had become Rivian’s best-selling vehicle and contributed significantly to sequential delivery growth.
However, Morgan Stanley maintained an Underweight rating and lowered its price target to $13 from $14.
The brokerage highlighted supplier execution and rising input costs as risks to the company’s margin outlook, despite encouraging underlying margins and R2 demand.
According to Koyfin data, 13 of the 25 analysts covering Rivian rate the stock Buy or Strong Buy, while seven have Hold ratings and five have Sell or Strong Sell ratings.
The average 12-month price target stands at $18.16.
Profitability remains a longer-term challenge
Despite improving demand prospects, Rivian continues to face challenges associated with its relatively small production scale.
Building vehicle manufacturing facilities requires significant investment, and the company has yet to establish the volumes needed for consistent profitability.
Wall Street expects Rivian to turn profitable in 2030, when annual vehicle sales are projected to reach 375,000 units.
The broader electric-vehicle market also faces pressure following the expiration of the $7,500 US purchase tax credit in September 2025.
Through September 2026, US consumers purchased approximately 726,000 all-electric vehicles, down 30% year over year.
Nevertheless, Rivian’s share of US electric-vehicle sales reached approximately 7% in the third quarter, an increase of around four percentage points from a year earlier.
The post Rivian stock jumps 10%, here’s why appeared first on Invezz
