Lucid Group (NASDAQ:LCID) shares might be down by almost 10% year-to-date, but considering the shape the stock was in only 3 months ago, that represents some positive progress. To wit, after getting hammered throughout most of the year’s first half, since mid-June the shares are up by 51%.
To draw in more investors, the luxury EV maker recently hosted its Technology & Manufacturing Day at its Arizona plant. The event highlighted Lucid’s technological advancements and the potential cost benefits they could bring. Management also shared future plans, including the launch of Gravity production in late 2024 and the release of a mid-sized vehicle by late 2026.
Bank of America analyst John Murphy came away from the event praising Lucid’s tech prowess, noting, “What emerged from the presentation is the clear advantage of LCID’s tech and, more impressively, their potential cost effectiveness.”
The main point emphasized by management pertained to the efficiency of its powertrain, which allows for a reduction in battery size and can lead to significant cost savings in EV production.
“We think this is a very important aspect to consider,” Murphy added, “as it opens future potential revenue opportunities from technology licensing to other OEMs, as its agreement with Aston Martin directly proves.” There’s also potential to build on the deal to supply Aston Martin with its tech as the recently announced JV between Rivian and VW shows.
However, while those are all positives, Murphy would “ultimately like to see this translate into improved financial results and profitability.” Lucid is making some progress here and said that by the end of August, unit sales had already reached 2023 volumes, which is an encouraging development.
Nevertheless, as Lucid’s CEO Peter Rawlinson said, the road to profitability really depends on scale and since production volumes are currently low, the company is not seeing any such benefits at the moment. Additionally, Murphy notes that the general slowdown in EV demand “increases uncertainty on that front.”
Bottom line, then, Murphy rates Lucid shares a Neutral, along with a $3.55 price target, suggesting the stock is overvalued by ~6%. (To watch Murphy’s track record, click here)
The other analysts tracking Lucid’s progress mostly agree with Murphy’s prognosis. The stock claims a Hold consensus rating, based on 8 Holds vs. 2 Sells. Most also seem to think the stock has overshot; the average price target stands at $2.94, implying the shares will see downside of 22% in the months ahead. (See LCID stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
