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1 Wall Street analyst upgraded Rivian stock with a potential catalyst on the horizon. Is it a purchase?

That’s what a Wall Street analyst thinks Rivian automotive industry (NASDAQ: RIVN) The shares have fallen far enough. UBS Analyst Joseph Spak upgraded the electric vehicle (EV) maker’s shares on Tuesday, suggesting another upgrade could be in the offing.

Spak discussed both a short-term view and a specific catalyst that could drive Rivian stock higher in the long term. After Rivian shares fell more than 50% in the past three months, Spak raised its rating to neutral from sell on Tuesday. He maintained his price target of $9, but noted that a new catalyst could also emerge.

One catalyst that could drive this EV manufacturer’s stock

In the near term, Spak noted, “We believe near-term risks and rewards are more balanced at current levels” following the recent decline in Rivian shares. He added that risks now reflected in the stock price include slowing growth in electric car sales overall. But short interest has also reached more than 18% of available Rivian shares.

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Any short-term catalyst could trigger a short squeeze that would push the stock higher. And a potential catalyst lies ahead. Rivian recently introduced the R2 SUV, its next EV offering. The analyst believes that a positive initial update on R2 reservations would support the stock’s longer-term potential.

The R2 won’t be available until 2026, but the stock could soar higher with any update with investors expecting growing sales in the coming years. With Rivian stock trading near all-time lows, much of the pessimism surrounding EV demand and slowing sales may already be priced into the stock.

Investors shouldn’t look at the short-term moves or whether short covering could push the stock higher. But if the R2 platform, or even the future R3 crossover SUV that will follow, becomes a hit with EV buyers, Rivian’s stock may have bottomed out. Risks remain, of course, but investors who believe EV demand will be strong for the cheaper vehicles should consider buying Rivian stock now.

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Howard Smith holds positions in Rivian Automotive. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

1 Wall Street analyst upgraded Rivian stock with a potential catalyst on the horizon. Is it a purchase? was originally published by The Motley Fool

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