Jefferies backed into a more neutral rating on Rivian shares. Analyst Philippe Houchois downgraded shares of the electric vehicle maker to hold from buy. Houchois’ $16 price target reflects 7.6% upside from Tuesday’s close. “Rivian still needs to demonstrate sustainable positive gross margin and a more capital-efficient business model,” Houchois wrote in a Wednesday note to clients. Houchois pointed out that while the company’s first-quarter earnings numbers were helped by a change in accounting, there was sill progress in bringing down costs for the R1 models and overseeing cash. He also said the company has a brand equity story worth appreciating. Indeed, Rivian beat analyst expectations when reporting last week. The carmaker also reaffirmed adjusted EBITDA guidance for the full year. But Houchois said Rivian has a “downbeat” demand outlook, with the company cutting its full-year delivery forecast. Because of that, Houchois said he hopes for more information on progress with the R2 line and for the company to find other third-party business opportunities. With the downgrade, Houchois joined the bulk of Wall Street analysts with hold-equivalent ratings. However, the typical analyst expects shares to slide from here. Shares ticked 1.7% before the bell on Wednesday following the call. That marks a turn after shares have risen more than 11% this year, outperforming the broad market.
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