23 Feb Lucid downgraded at Bank of America, citing near-term demand concern
Despite a promising long-term outlook for shares of Lucid Group , weak demand is likely to pressure shares near term, according to Bank of America. Analyst John Murphy downgraded shares of the electric vehicle company to a neutral rating from a buy, citing Lucid’s disappointing fourth-quarter results, financial guidance and production forecast. Murphy specifically cited a disappointing production outlook as reason for the sentiment shift. Lucid said it expects to deliver 10,000 to 14,000 vehicles in 2023, whereas Bank of America had expected 27,000. “LCID noted that ‘production is no longer a bottleneck,’ but also that the supply chain remains a challenge and is hindering its ability to deliver vehicles to customers with the precise specifications requested,” he wrote. “While we think this makes sense, demand has not kept pace, and we would expect LCID to invest in efforts to build its brand awareness,” Murphy added. Despite these headwinds, Murphy still views Lucid as one of the most attractive start-up EV automakers and believes it’s better situated than many of its peers, given its management’s experience. “That said, we now expect it could take until 2027+ for LCID to break even on an operating and cash flow basis (prior 2026) and it will need to raise more capital sooner than we had expected,” he wrote. The downgrade from Bank of America comes after Lucid posted fourth-quarter revenue that fell short of estimates, with shares tumbling 10% in premarket trading Thursday. Lucid’s stock has surged more than 46% this year, after plunging 82% in 2022’s shakeout. The stock was also one of the worst performers in the Nasdaq-100 index last year. LCID YTD mountain Lucid shares so far this year Along with the downgrade, Murphy slashed Bank of America’s price target to $10 from $18, suggesting shares should remain rangebound from Wednesday’s close. — CNBC’s Michael Bloom contributed reporting