Bank of America reiterated a Neutral rating on Lucid Group (NASDAQ:LCID) with a 12-month price target of $8.00 after the automaker announced delivery numbers below forecasts. LCID reported a total of 1,404 deliveries in 2Q23. Although this marked a significant 107% year-over-year increase, it fell short of Bank of America's forecast of 2,200 by 36%. Additionally, it was 23% lower than the consensus estimate of 1,818 and showed minimal change from the first quarter of 2023, where deliveries stood at 1,406.
BofA analysts wrote in a note, “The weaker deliveries suggest LCID is continuing to experience tepid demand for the Air sedan even before it has fully ramped production. In our view, this puts pressure on management to deliver the high-end trim levels of the Sapphire Air shortly to bridge the gap until 2024 when the Gravity crossover utility vehicle (CUV) is launched.”
LCID made a public offering of 173.5 million common stock shares on May 31, 2023. Additionally, Saudi Arabia's Public Investment Fund plans to invest $1.8 billion by purchasing 265.7M common stock shares through a private placement. This acquisition represents approximately 24% of the total outstanding shares and is anticipated to generate $3B in gross proceeds. Bank of America has adjusted their model to incorporate the $3B share issuance, which is expected to increase earnings per share (EPS).
Bank of America has revised their projection for the second quarter of 2023, now estimating an EPS of ($0.36). This is slightly higher than the consensus estimate of ($0.35) and an improvement from the previous estimate of ($0.45). Looking at the full year of 2023, Bank of America forecasts an EPS of ($1.45), which is higher than the consensus estimate of ($1.39) and an improvement from their prior projection of ($1.80).
“We see risks from softer demand and expect the company will need to raise more capital,” added Murphy, “but these points are balanced with our view that LCID is one of the most attractive among the universe of start-up EV automakers because it has class-leading powertrain tech along with other key attributes.”
Shares of LCID are up 1.37% in pre-market trading on Monday.