Why Lucid Analyst Says Deliveries Miss Isn't A Big Deal Ahead Of Q4 Print

Lucid Group Inc LCID is scheduled to report its fourth-quarter results after market close on Feb. 28. Ahead of the results, an analyst at Morgan Stanley warned that deliveries could underperform relative to expectations.

The Lucid Analyst: Adam Jonas has an Underweight rating and a $16 price target on Lucid shares.

The Lucid Thesis: Lucid investors are bracing for Air sedan deliveries to come in well below the guidance, Jonas said. The Street number for fourth-quarter deliveries could be in the range of 200-unit range, he added.

"A 4Q delivery miss is not a big deal in our opinion," the analyst wrote in the note.

Investors can look ahead to the management reiterating or revising the 2022 delivery guidance of 20,000, the analyst said. This number should be seen as a bull case/stretch goal, he added.

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The reservation number, Jonas said, will also be an important sentiment indicator. The metric will likely be impacted by "visibility/plans on future delivery," the analyst noted.

Lucid may have ended the fiscal year 2021 with about $4 billion of net cash, the analyst said. The free cash flow burn for the fiscal year 2022 will likely be $2.7 billion, he added.

The analyst expects the company to issue $3 billion of capital through new stock issuances in the years to come.

"We would prepare for high levels of volatility around the share price given the stock's unusually low free float, high short interest and what we believe to be a steadfast/strategic commitment by its 63% controlling shareholder," Morgan Stanley said.

LCID Price Action: Lucid shares were down 4.73% at $26.78 Friday afternoon at publication.

Photo: Courtesy of Lucid