Analysts at Morgan Stanley said in a note Friday that they see Rivian Automotive (NASDAQ:RIVN) as "uniquely positioned within autos" when it comes to scaling a fully integrated software stack critical to unlocking the AI opportunity.
The investment bank hosted Rivian CEO RJ Scaringe and his team for an investor lunch yesterday at Morgan Stanley's headquarters in Manhattan.
Management is said to have reiterated confidence in the company's ability to reach their positive gross margin target in 4Q24 via BOM cost reduction, normal plant conversion, and regulatory credit upside as legacy OEMs pull back on EVs and instead contract to buy credits to adhere to EPA regulations.
"Mr. Scaringe also emphasized RIVN's structural advantages in their fully integrated software and perception stack and opportunity for partnership which occupied a fairly large portion of the interactive discussion with a balance of auto and tech investors," said Morgan Stanley.
The bank reiterated its Overweight rating and $13 price target on Rivian, urging conservatism in the profitability outlook given the ongoing EV deceleration.
"The ability for management to manage the burn (and associated equity dilution risk) is critical to adding more 'time value' to the strategic AI option," concluded the bank.