Lucid Group (NASDAQ:LCID) stock has gotten little love from Wall Street in recent years with few viewing the luxury EV maker as a promising prospect. But one Street analyst is now willing to take that risk.
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Following Lucid’s better-than-expected Q3 readout, R.F. Lafferty’s Jaime Perez has raised his rating on Lucid shares from Hold (i.e., Neutral) to Buy based on “cost improvement, continued volume growth, and balance sheet strength.” Perez’ Street-high $4 price target suggests the shares will climb 87% higher over the coming months. (To watch Perez’ track record, click here)
There was plenty to like in Lucid’s Q3 readout. During the quarter, the company made 2,781 deliveries, amounting to a 91% improvement on last year. That resulted in revenue rising by 45.1% year-over-year to $200 million, ahead of consensus by about $2 million. The delivery boost was attributed to rising demand in North America as brand recognition grows.
Additionally, Lucid reduced its cost of goods sold by 12%, which improved gross margins to negative 106%, up from last year’s negative 241%. The company ended the quarter with approximately $4.03 billion in cash, cash equivalents, and short-term investments, and total liquidity of $5.16 billion, excluding a recent $1.75 billion financing deal completed in October. Lucid also reiterated its annual production target of 9,000 units while lowering 2024 capital expenditures by $300 million to $1.0 billion.
Looking at all of this taking place, the overall picture appears increasingly healthy to Perez. “Specifically,” he goes on to say, “the company’s cost structure is improving while maintaining steady sales growth. Next year, Gravity is expected to hit the road and should drive volume growth throughout the year.”
Instead of rapidly scaling up production, Lucid is introducing the Gravity SUV at a “measured rate to preserve cost improvement,” which should contribute to better gross margins. Moreover, the company has raised around $4 billion in capital year-to-date, securing funding through 2026 and supporting the launch of Gravity and its mid-size platform.
Meanwhile, Lucid has now started accepting orders for the Gravity and expects to begin “soft production” in the coming weeks, with more information to come on the timing of customer deliveries.
So that’s a bull’s take but currently, Perez is the lone one on Wall Street. With an additional 6 Holds and 2 Sells, the analyst consensus rates the stock a Hold. However, most also seem to think the share price has overshot to the downside; the $3.11 average target suggests the shares will climb 45% higher 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.
