Stock market today: S&P 500 climbs as health care, tech gain; Nvidia earnings loom
On Wednesday, BofA Securities adjusted its stance on Lucid Group Inc. (NASDAQ: NASDAQ:LCID), moving the electric vehicle manufacturer’s stock rating from Neutral to Underperform. Accompanying this downgrade, the firm also slashed Lucid’s price target significantly, from $3.00 to just $1.00. The revision in the stock’s outlook was prompted by concerns over the company’s ability to deliver future products, which may impact its longer-term volume projections. The stock, currently trading at $2.61, has already declined over 22% in the past week. InvestingPro analysis indicates the stock is currently undervalued based on its Fair Value model, with 14 additional key insights available to subscribers.
The BofA Securities analyst cited potential delays or cancellations in upcoming Lucid projects as a key reason for the downgrade. This uncertainty, particularly regarding the mid-size platform known as the Space, anticipated for a 2026 launch, has cast doubt on Lucid’s ability to scale effectively. While the company maintains a strong liquidity position with more cash than debt and a healthy current ratio of 3.71, InvestingPro data shows the company is quickly burning through its cash reserves.
The analyst’s commentary highlighted the risk posed by the possible postponement in achieving positive gross profit due to revised volume estimates. The completion of the Space platform and other future products is now considered highly uncertain. This uncertainty is exacerbated by the current internal challenges facing Lucid, with InvestingPro data revealing concerning gross profit margins of -132.4%. Get the complete financial health analysis and detailed insights in the comprehensive Pro Research Report, available for over 1,400 US stocks.
Additionally, the analyst expressed concern that knowledgeable consumers might turn away from Lucid’s offerings in favor of other electric vehicles, given the company’s present difficulties. This could lead to further risks to the company’s volume sales, as consumer confidence plays a critical role in the competitive electric vehicle market.
The new price target of $1.00 reflects a stark reassessment of Lucid’s potential performance, indicating a more bearish outlook on the company’s stock. This comes as the analyst anticipates significant headwinds for Lucid in achieving its production and sales goals amidst an increasingly competitive and uncertain environment.
In other recent news, Lucid Group Inc. reported its fourth-quarter 2024 earnings, revealing a revenue of $234.5 million, which exceeded forecasts by $34 million. Despite a loss per share of $0.22, this was better than the anticipated $0.25 loss. Lucid Group’s production reached 3,386 vehicles, marking a 42% increase year-over-year, and deliveries rose by 79% to 3,099 vehicles. The company also launched the Lucid Gravity SUV, expanding its product lineup and setting a production target of 20,000 vehicles for 2025. Lucid’s gross margin improved significantly to -89% from -225% the previous year. The company’s liquidity stood at $6.13 billion, with plans for $1.4 billion in capital expenditures. Additionally, Lucid is exploring technology licensing opportunities and expects further improvements in gross margins. Analyst firms such as Bank of America Securities and RBC raised inquiries about leadership transitions and production capacity, reflecting ongoing interest in Lucid’s strategic direction.
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