Bank of America Just Cut Its Price Target on Lucid Motors (LCID) Shares.

Bank of America Just Cut Its Price Target on Lucid Motors (LCID) Shares.

Shareholders expecting LCID stock to accelerate in 2024 have been left disappointed

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It has not been a very good year Lucid (NASDAQ:LCID) shares. Shares of the pure-play electric car (EV) company are down about 35% so far in 2024 amid an EV price war, high interest rates and the current preference for hybrids over EVs.

Yesterday, Lucid reported its first quarter delivery and production metrics. The company’s shipments grew by 40% year-on-year (YOY) by 1,967 vehicles, beating analyst estimates by 1,745 vehicles. However, Q1 production of 1,728 vehicles missed analyst estimates of 2,123 vehicles by a whopping 18.6 percent. Lucid expects to produce 9,000 cars this year, meaning that production should increase as the year progresses.

These numbers were not enough to satisfy Bank of America analyst John Murphy. The analyst downgraded his stock of LCID target price to $3.50 from $4.50 while maintaining a “neutral” rating. This target means a profit of around 30% from current prices. Murphy also lowered his price targets Rivian (NASDAQ:RIVN) and Tesla (NASDAQ:TSLA)

LCID Stock: Bank of America Cuts Price Target to $3.50

Murphy fixed his LCID last time target price on February 22, reducing it to $4.50 from $7 per share. Murphy is a sophisticated analyst TipRanks, coming in as 1,040 out of 8,799 total analysts. He has a success rate of 55% and an average one-year return of 7.20%.

LCID shares carry average price target of $4.11 among the 14 analysts that cover the stock.

The main reason why analysts have been hesitant about Lucid is its cash burn and lack of profitability. Fortunately, the company has loyal support from Saudi Arabia Public Investment Fund (PIF) and its related partners. In March, PIF partner Third Ayar Investment Company he agreed to invest $1 billion to Lucid in lieu of new convertible preferred stock.

At the same time, Morgan Stanley analysts noted that this investment was smaller than expected. The company expects the investment to equal Lucid’s loss of free cash flow for the first half of the year. Cash burn for the full year is expected to be $2.6 billion.

At the same time, the profit remains for several years. Analysts do not expect it Lucid to earn profits every year until 2030.

As of the date of publication, Eddie Pan does not hold (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author, according to Publication Guidelines.

Eddie Pan specializes in institutional investment and domestic operations. He writes for InvestorPlace’s Today’s Market team, which covers the latest news involving popular stocks.