Why This Analyst Halves Lucid Group's Price Forecast Despite 12%-23% Higher Tech Efficiency Than Tesla

Author: Nabaparna Bhattacharya | March 08, 2024 02:08pm

RBC Capital Markets analyst Tom Narayan reiterated the Sector Perform rating on Lucid Group, Inc. (NASDAQ:LCID), lowering the forecast to $3 from $6.

While the company’s management is in dialog with some major OEMs on licensing, these discussions have largely been reactive, according to Narayan. 

The analyst lowered Cars per/share value to $0.93 from $1.42 (lowered EV/Sales multiple to 1x from 1.5x). 

The Aston Martin deal, which is a supplier deal, not a licensing deal, however, has triggered some interest from OEMs, he adds. 

Narayan also reduced Licensing/share value to $2 from $4 on lower probabilities of higher licensing penetration levels until signs of deals being struck are in view.

Lucid hopes that its Gravity and Mid-size offerings will reverse demand woes on its sedans.

Lucid’s drive units would suit PHEVs, which have become en vogue given the current EV slowdown underway in the U.S., the analyst states.

According to the analyst, Lucid tech is 12%-23% more efficient than Tesla, Inc. (NASDAQ:TSLA) and 30% + more efficient than all other OEMs.

In February, the firm reduced its rear-wheel drive version of the base Lucid Air Pure to $69,900 from $77,400, Narayan notes. 

Management believes at this price point, it now competes with the Mercedes E Class and the BMW 5-Series, as opposed to the S-Class or the 7-Series.

The analyst noted Lucid would be entering another very crowded field with their mass-market offering. While the company hasn’t discussed specifics, the analyst noted it will be targeting the ~ $60k price point for a 2-row SUV very similar to the Model Y.

The analyst models 80k units in 2029, representing >50% of total company revenue at that point in time.

Price Action: LCID shares are trading lower by 0.80% to $3.095 on the last check Friday.

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Posted In: LCID TSLA