It hasn’t exactly been a good year for Lucid (NASDAQ:LCID) stock. Shares of the pure-play electric vehicle (EV) company are down by about 35% so far in 2024 amid an EV price war, high interest rates and a current preference for hybrids over EVs.
Yesterday, Lucid reported its first-quarter delivery and production metrics. The company’s deliveries grew by 40% year-over-year (YOY) to 1,967 vehicles, beating the analyst estimate for 1,745 vehicles. However, Q1 production of 1,728 vehicles missed the analyst estimate for 2,123 vehicles by a significant 18.6%. Lucid expects to produce 9,000 vehicles this year, meaning that production must ramp up as the year progresses.
These numbers weren’t enough to satisfy Bank of America analyst John Murphy. The analyst lowered his LCID stock price target to $3.50 from $4.50 while maintaining a “neutral” rating. This target implies upside of about 30% from current prices. Murphy also lowered his price targets on Rivian (NASDAQ:RIVN) and Tesla (NASDAQ:TSLA).
LCID Stock: Bank of America Cuts Price Target to $3.50
Murphy last adjusted his LCID price target on Feb. 22, cutting it to $4.50 from $7 per share. Murphy is a high-ranking analyst on TipRanks, coming in as 1,040th among 8,799 total analysts. He carries a success rate of 55% and an average one-year return of 7.20%.
LCID stock carries an average price target of $4.11 among 14 analysts with coverage of the stock.
A major reason why analysts have been hesitant with Lucid is its cash burn and lack of profitability. Luckily, the company has loyal backing from Saudi Arabia’s Public Investment Fund (PIF) and its related affiliates. In March, PIF affiliate Ayar Third Investment Company agreed to invest $1 billion in Lucid in exchange for newly issued convertible preferred stock.
At the same time, Morgan Stanley analysts noted that this investment was smaller than anticipated. The firm expects the investment to equal Lucid’s free cash flow loss for the first half of the year. Full-year cash burn is expected to be $2.6 billion.
Meanwhile, profitability remains years away. Analysts don’t expect Lucid to become profitable on an annual basis until 2030.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
