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RBC cuts Lucid Group stock target, sector perform on licensing value concerns

EditorNatashya Angelica
Published 19/11/2024, 12:04
LCID
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On Tuesday, RBC Capital adjusted its outlook on Lucid Group Inc. (NASDAQ:LCID) shares, reducing the price target to $2 from the previous $3 while maintaining a Sector Perform rating.

The revision follows a reassessment of the company's third-quarter earnings model, which highlighted concerns over the current value of licensing per share. The analyst at RBC Capital cited the lack of evidence of new deals being struck as the primary reason for the lowered price target.

Despite the reduction in the price target, the analyst acknowledged the management's efforts in cost control. The commentary from RBC Capital suggests that while there are challenges in the licensing aspect of Lucid Group's business, the company's cost management practices have been commendable.

Additionally, the analyst expressed interest in the upcoming demand figures for Lucid's Gravity SUV, indicating that future performance indicators for the company are anticipated with keen interest. The Gravity SUV is an important product for Lucid Group, as demand figures could potentially influence the company's stock performance and valuation.

Lucid Group, known for its luxury electric vehicles, has been navigating a competitive and rapidly evolving EV market. As part of its strategy, the company has been focusing on expanding its product lineup and controlling operational costs.

The price target adjustment by RBC Capital serves as a data point for investors monitoring Lucid Group's financial health and market position. It reflects the analyst's current view based on available information, without speculating on the company's long-term prospects or broader industry trends.

In other recent news, Lucid Group has seen a significant rise in vehicle deliveries and revenue. The electric vehicle manufacturer reported a 91% year-over-year increase in vehicle deliveries, totaling 2,781 units in the third quarter, and a 45.2% rise in revenue, reaching approximately $200 million. However, Lucid Group also reported an adjusted EBITDA loss of $613.1 million, largely due to non-cash losses associated with derivative liabilities.

Analysts at R.F. Lafferty and Stifel have recently adjusted their ratings for Lucid Group. R.F. Lafferty upgraded Lucid Group's rating to Buy from Hold, citing cost improvements and volume growth. On the other hand, Stifel maintained a Hold rating but reduced the price target to $3.50, following Lucid's third-quarter financial performance and the recent equity raise of $1.75 billion.

Lucid Group has also begun accepting orders for its new Gravity model and expects to start its production soon. The company's midsize vehicle platform is slated to begin manufacturing in 2026. These are among the recent developments that highlight Lucid Group's ongoing efforts to strengthen its market position and operational growth.

InvestingPro Insights

Recent data from InvestingPro sheds additional light on Lucid Group's financial situation, complementing RBC Capital's analysis. As of the last twelve months ending Q3 2024, Lucid reported revenue of $730.51 million, with a notable quarterly revenue growth of 45.15% in Q3 2024. This growth aligns with one of the InvestingPro Tips, which indicates that analysts anticipate sales growth in the current year.

However, the company's financial health presents some challenges. Lucid's gross profit margin stands at -132.4%, reflecting the difficulties in achieving profitability that RBC Capital alluded to. This is further supported by another InvestingPro Tip, which notes that Lucid suffers from weak gross profit margins.

On a positive note, Lucid holds more cash than debt on its balance sheet, providing some financial flexibility as it navigates the competitive EV market. This could be crucial as the company focuses on cost control measures mentioned in the RBC Capital analysis.

For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips on Lucid Group, providing a deeper understanding of the company's financial position and market performance.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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