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Citi updates its outlook for Lucid stock. Here's where it expects LCID shares to trade

Published 04/22/2024, 03:48 PM
Updated 04/22/2024, 03:50 PM
© Reuters.  Citi updates its outlook for Lucid stock. Here's where it expects LCID shares to trade

Citi Research analysts said Friday they are resuming coverage of Lucid (NASDAQ:LCID) with a Neutral/High Risk rating and a price target of $2.90, implying over 20% upside from the current levels.

“We see a balanced risk/reward when weighing Lucid’s strong EV tech position & adequate NT liquidity against past demand/branding challenges and the reliance on a successful Gravity ramp later this year,” analysts wrote.

After reviewing the Gravity model, analysts said they felt encouraged by the vehicle’s prospects for success.

Nonetheless, they acknowledge a significant execution risk in launching Gravity on time, adding that launching with the most affordable trims could help drive volume and build commercial momentum, even if it impacts initial contribution margins negatively.

“Over the near-term, we expect the shares to trade range-bound until the Gravity launch comes into clearer view,” analysts said.

To reflect the carmaker’s 2024 guidance and Q1 actuals, Citi now estimates that Lucid will deliver around 9,100 vehicles in 2024. It is also projecting an adjusted EBITDA loss of $2.0 billion for the year and expects the company to reach breakeven by 2027.

“We do model 2025E losses widening YoY on the initial Gravity launch and higher R&D for the premium SUV due out late 2026,” analysts added.

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