Tesla, Rivian Stocks Driven Higher by Analysts’ Optimism

Shares of electric vehicle makers rallied in intraday trading Friday after analysts at Mizuho issued price target bumps for Tesla (TSLA) and Rivian (RIVN). 

Tesla stock climbed 3.5% to $249.44, Rivian surged 12% to $18.76, and Lucid Group (LCID) jumped 22% to $4.17 as of 1:30 p.m. ET Friday.  

Mizuho raised its Tesla price target to $230 from $180, maintaining a “neutral” rating, based in part on the company’s better-than-expected second-quarter deliveries report.

Mizuho Managing Director Vijay Rakesh noted that new European Union (EU) tariffs are impacting higher Model 3 pricing, with 2024 global EV sales now expected to grow 15% year-over-year. 

The Bearish Case for Tesla

Meanwhile, Tesla stock was hit with a downgrade from UBS on Friday, with analysts finding it “increasingly difficult to justify [Tesla’s] valuation.”

Analysts Joseph Spak, Patrick Hummel, and Alejandro Nuno bumped Tesla down to “sell” from “neutral,” arguing that the company’s share price comes with a baked-in expectation of future success. 

“TSLA has always had a premium attached to it for other, future, growth initiatives. Properly valuing that optionality is difficult,” the analysts’ note said. “This premium has widened of late, we believe, on AI enthusiasm.”

“While TSLA is investing heavily in AI and the tech is making progress, investment is costly, pace of improvement may slow and the payoff is long dated,” UBS added. “If market enthusiasm for AI diminishes, this may impact TSLA’s multiple.”

Despite the downgrade, UBS actually raised its price target for the company to $197 from $147.

Rivian and Lucid

Mizuho also took a bullish stance on Rivian, upping its price target to $15 from $11 and issuing a “neutral” rating thanks to a “better balance sheet and less liquidity risk.”

Rivian recently reported 13,790 second-quarter deliveries, compared with analysts’ consensus expectation of 11,510 deliveries, according to estimates compiled by Visible Alpha.

Rivian’s deliveries grew 9% year-over-year, while Tesla’s fell 5%, the firm noted. However, Rivian did not adjust its expectation of low-single-digit percentage full-year growth, which “which could point to some 2H challenges,” Mizuho said. 

Looking ahead, the “key for RIVN will be its ability to drive further demand in the high-end premium EV segment,” in the second half of 2024 and 2025, the firm added. 

Lucid, meanwhile, announced second-quarter deliveries of 2,394 vehicles earlier this week, a roughly 70% increase year-over-year. Shares have gained more than 40% over the past five sessions.