On Thursday, Canaccord Genuity adjusted its outlook on Lion Electric (NYSE:LEV), reducing the electric vehicle (EV) manufacturer's share price target to $1.50 from the previous $2.50. The firm maintained a Hold rating on the stock despite the lowered expectations.
This adjustment follows Lion Electric's December quarter results, which were notably affected by significant delays in the Canadian Zero Emission Transit Fund (ZETF) program applications.
The delays in the ZETF program, coupled with the anticipation of progress from the EPA’s Clean School Bus Program, have left Lion Electric's performance somewhat stagnant. Canaccord Genuity acknowledges the company's potential, noting that Lion Electric is a relatively new entrant in the EV space, often leading the charge against established automotive incumbents in many of its markets.
Despite the reduction in the price target, Canaccord Genuity remains on the sidelines with a Hold rating, indicating a wait-and-see approach for a more definitive trend in the company's performance. The firm's decision to adjust its price target comes after revising some of its estimates for Lion Electric.
The company is actively working to mitigate financial pressures by reducing costs and inventory by $50 million to $75 million.
Moreover, given Lion Electric's current liquidity situation, Canaccord Genuity suggests that it would be prudent for the company's management to continue exploring additional strategies to strengthen their balance sheet, enhance liquidity, and secure its long-term growth trajectory.
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