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On Monday, CFRA analyst Garrett Nelson issued a downgrade for Lucid Group Inc. (NASDAQ:LCID), moving the stock rating from Sell to Strong Sell with a maintained price target of $1.00. The $10.25 billion market cap company, which InvestingPro data shows is trading near its Fair Value, faces significant challenges despite analysts anticipating 29% sales growth this year. Nelson adjusted the earnings per share (EPS) estimates for the electric vehicle manufacturer, raising the forecast to -$1.12 from -$1.15 for 2024 and improving the 2025 projection to -$1.10 from -$1.20.
Lucid reported its fourth-quarter vehicle production and deliveries, surpassing CFRA's estimates with 3,386 units produced and 3,099 units delivered. These figures exceeded the analyst's production and delivery forecasts of 3,357 and 2,400 units, respectively. The company achieved its 2024 production guidance of 9,000 units, following a record-high quarterly deliveries total.
Despite the recent recovery in Lucid's share price since its record low in mid-February, CFRA has downgraded the stock due to several concerns. Nelson highlighted Lucid's high cash burn rate, which is averaging between $700 million and $800 million per quarter, reflected in the negative free cash flow of $2.83 billion.
While InvestingPro analysis shows the company maintains a healthy current ratio of 3.71, the company's lack of size and scale compared to larger automakers, with a production rate of only 37 vehicles per day in Q4, remains concerning. Additionally, Lucid has had to implement significant price reductions to boost sales, with average vehicle price realizations decreasing by nearly $16,000 from the first to the third quarter, contributing to a concerning gross profit margin of -132.4%.
Lucid is scheduled to report its fourth-quarter earnings on February 25. For deeper insights into Lucid's financial health and detailed analysis, investors can access comprehensive Pro Research Reports and 12 additional key ProTips through InvestingPro. The CFRA analyst's commentary reflects skepticism about the company's financial sustainability and competitive position in the electric vehicle market, despite the recent uptick in production and delivery numbers.
In other recent news, Lucid Group has reported key financial figures and strategic developments.
The company produced a total of 9,029 vehicles and delivered 10,241 vehicles in 2024, with a 27% revenue growth forecast for the fiscal year. However, it faces profitability challenges, as indicated by its negative gross profit margin of -132.4%.
Analysts have revised their outlook on Lucid Group. RBC Capital lowered its price target due to concerns over licensing value, while R.F. Lafferty upgraded the company's rating to Buy from Hold, citing cost improvements and volume growth. Stifel maintained a Hold rating but reduced the price target following Lucid's third-quarter financial performance.
Lucid Group 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. Additionally, Lucid Group has begun accepting orders for its new Gravity model and expects to start its production soon, with manufacturing of its midsize vehicle platform slated to begin in 2026.
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