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Bank of America senior automotive equity analyst John Murphy joins Market Domination to discuss the firm's rationale behind downgrading Rivian (RIVN) stock to Underperform from Neutral and lowering its price target to $10 from $13.
Murphy explains that multiple factors contributed to BofA's downgrade of the electric vehicle (EV) manufacturer. He cites lower projected volume in the 2025 outlook, reduced profit expectations, and only moderately positive commitments to gross margin improvement, including approximately $200 million coming from Volkswagen, which he says "obfuscates the quality of the earnings in 2025."
A key concern Murphy highlights is "a gap in product introductions" at Rivian until 2026, when the R2 is scheduled for release. He describes this upcoming model as the company's "Model Y moment," drawing a parallel to Tesla's (TSLA) significant growth following that vehicle's launch.
"What we're going to need to do is fight through this next year and a half or so, maybe even more, until we get to that more mass-market product, and things can really start clicking for the company," Murphy explains, emphasizing that "we really need to get to that higher volume product."
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This post was written by Angel Smith