Lucid Analysts Mixed On Ratings, Price Targets But Praise Technology And This Item That's Better Than Tesla, Rivian

Electric vehicle company Lucid Group Inc LCID reported fourth-quarter financial results Wednesday after market close. The results included an update on vehicle production, deliveries and reservations. The company also shared guidance for 2023.

Analysts are breaking down what the results and guidance mean.

The Lucid Analysts: Needham analyst Chris Pierce reinstated a Buy rating and a price target of $16 on Lucid.

Bank of America analyst John Murphy downgraded shares from Buy to Neutral and lowered the price target from $18 to $10.

Cantor Fitzgerald analyst Andres Sheppard had an Overweight rating and lowered the price target from $18 to $13.

Related Link: Why Lucid Stock Is Crashing Today

The Analyst Takeaways: Needham's Pierce said the electric vehicle company’s technology and battery efficiency showed it could be a player in the sector.

“In our view, LCID has developed arguably the most efficient battery and overall technology in the EV space, with range (in miles) divided by battery size (in kWH) driving efficiency well above luxury vehicle peers,” Pierce said.

The analyst said Lucid might have taken a conservative approach to production with uncertainties on its order book and the macro environment.

Lucid added production was no longer a bottleneck, which Pierce said showed Lucid could now build at an “improving scale” for its first phase and move onto its second and third phases.

“We believe that LCID’s current valuation does not represent the potential value of this IP given the advantages that can be fixed by a leader in battery efficiency as EV penetration grows.”

Bank of Amercia's Murphy was on the other side of the valuation of Lucid, calling out questions on demand.

“Given 4Q22 results, the light 2023 outlook, and lower than expected 2023 production forecast, we are materially lowering our 2023 estimates,” Murphy said.

The analyst lowered estimates for 2023 and said it could take until 2027 for the company to break even on free cash flow, a year later than the analyst previously estimated.

“LCID will need to raise more capital sooner than we had previously expected.”

The analyst added Lucid was one of the most attractive start-up electric vehicle companies and had an impressive management team.

Cantor Fitzgerald's Sheppard lowered the price target on Lucid with concerns over negative gross margins, lower-than-expected production guidance and potential liquidity needs.

The analyst said deliveries to Saudi Arabia were expected to begin ramping up in the second quarter of 2023 as part of a deal for up to 100,000 vehicles over a 10-year period. Sheppard expected the company to deliver around 600 vehicles to Saudi Arabia in 2023, around 1,200 in 2024 and the figure to hit a range of 4,000 to 8,200 annually from 2025 through 2032.

“In our model, we conservatively model total delivery of 50,000/100,000 vehicles through 2032,” Sheppard said.

Sheppard highlighted Lucid’s technology and battery efficiency as being better than rivals like Tesla Inc TSLA and Rivian Automotive Inc RIVN.

“The company’s vehicles are able to provide longer range, faster miles-per-minute charging, and equivalent range with a smaller, and therefore lower-cost battery pack.”

The analyst called the range of the Lucid Air a “significant differentiator” in the electric vehicle sector.

“We remain bullish on LCID over the long term, and we continue to believe that the company’s vehicles are able to provide greater battery efficiency, longer range, faster charging and more interior space relative to other passenger EVs, which are important differentiators.”

LCID Price Action: Lucid shares are down 18,84% to $8.10 on Thursday.

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Photo: Courtesy Lucid