Citi’s Itay Michaeli resumes coverage with a neutral rating, down from previous buy rating, but stock rises toward a 6th-straight gain
Shares of Lucid Group Inc. surged Monday, to put them on course for a sixth-straight gain, as a broad rally in the stocks of fellow electric-vehicle makers helped distract investors from a downbeat analyst note.
Lucid’s stock LCID, +7.26% charged up 4.0% in morning trading and has powered up 31.1% amid a six-day win streak. That would be the longest win streak since the California-based EV maker went public on July 26, 2021 through a merger with a special-purpose acquisition company (SPAC).
It was also headed for the best six-day performance since it ran up 36.1% during the six-session stretch that ended Jan. 26, 2023.
Citi Research’s Itay Michaeli resumed coverage of Lucid’s stock with a neutral rating and $8 stock price target. Prior to a two-month period of being not rated, Michaeli had rated the stock at buy with an $11.50 price target.
Despite the effective downgrade, Lucid’s stock rallied, after upbeat delivery and production data from a number of other EV makers fueled a rally in the sector. Among those that reported data, shares of Tesla Inc. TSLA, +6.90% ran up 6.8%, China-based Nio Inc. NIO, +3.51% tacked on 1.7% and Rivian Automotive Inc. RIVN, +17.41% powered up 11.3%.
Citi’s Michaeli said in a Monday note that while he remains “constructive” on Lucid’s technology relative to its peers, which was recently validated with the supply agreement with U.K.-based luxury automaker Aston Martin Lagonda Global Holdings PLC ARGGY, -1.86% AML, -1.58%, there’s some uncertainty regarding near-term demand for the Lucid Air EV and the company’s gross margin performance.
“To that, our latest 3rd-party data checks weren’t discouraging but didn’t quite give us sufficient conviction either, so we opt to wait for an opportunistic entry point,” Michaeli wrote in a note to clients.
Meanwhile, said recent price cuts to rival EV models, such as those by Tesla Inc. TSLA, +6.90%, and the time until the new Gravity sport-utility vehicle (SUV) arrives, adds risk to Lucid’s gross margin outlook.
The company said the Gravity luxury SUV will arrive in 2024.
“We look for signs of strong demand/brand momentum for the Lucid Air, gross margin progression and greater visibility around the 2024 launch of the Gravity SUV,” Michaeli wrote.
Lucid’s stock has lost 9.3% over the past three months, while Global X Autonomous and Electric Vehicles exchange-traded fund DRIV, +1.08% has rallied 11.2% and the S&P 500 index SPX, +0.12% has gained 7.8%.