Guggenheim initiated coverage on Rivian Automotive Inc (NASDAQ:RIVN) with a Buy rating Tuesday as the firm expects the electric vehicle company to emerge from the EV winter as a market leader.

What To Know: Guggenheim analyst Ronald Jewsikow slapped a Buy rating on Rivian shares and set a price target of $18, as he saw an opportunity ahead for the company to grow its market share by appealing to younger, digitally oriented consumers.

The Guggenheim analyst highlighted a compelling catalyst path around a few main theses that support his optimism about the manufacturer.

First, Jewsikow sees an inflection point ahead in terms of financials. The analyst believes now is the time to put some money to work in Rivian stock, citing historical alpha generation related to buying before a company reaches breakeven EBITDA. Jewsikow anticipates a positive inflection point in EBITDA in mid-2026 and expects Rivian to reach breakeven gross margin in the fourth quarter of this year.

"R1 breakeven is important because it should help investors gain confidence in the cost bridge required to R2/R3 profit," Jewsikow said in a new note to clients.

The analyst believes a recent reduction in cash burn will help to alleviate some investor concerns related to the ramp to the R2 and R3 platforms. He also noted that he sees upside to some of the company's guidance, which could help drive further upside in the stock.

It's really all about the R2 and R3 EV models for Jewsikow. The Guggenheim analyst highlighted the upcoming platforms as the largest source of value in the firm's sum of the parts valuation model.

"We look at the economics of the R2/R3 at scale and believe a high-teens gross margin is the base case. Our analysis of small and mid-size SUVs by brand suggests the market is 7-10x larger than the R1, but could be even larger using the Tesla Model Y (vs. Model X) as an example," Jewsikow said.

The analyst noted that Rivian owners consistently expressed high levels of customer satisfaction and suggested the Rivian brand is resonating in a way with consumers that no other brand has since Tesla Inc (NASDAQ:TSLA).

"While EV sentiment remains negative, we believe RIVN is uniquely positioned to demonstrate to a growing share of younger, digitally oriented consumers that EVs are not only cleaner and greener, but can deliver a superior product compared to ICE vehicles enabled by software, technology and thoughtful design elements," Jewsikow said.

RIVN Price Action: Rivian shares were up 6.68% at $11.75 at the time of publication Tuesday, according to Benzinga Pro.

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Photo: courtesy of Rivian.