Investor's Corner

Lucid Group’s strong Q3, MotorTrend award boost CFRA price target

Credit: Lucid Group

Lucid Group (NASDAQ: LCID) reported a strong Q3 Earnings last evening, its first as a public company. Additionally, the company received its first big accolade as MotorTrend awarded the Lucid Air Dream Edition its 2022 “Car of the Year” award, making the company the first automaker to win the prestigious trophy with its first mode.

Lucid Group detailed an impressive Q3 last evening in its first Earnings Call, which showed the company had $4.8 billion in cash on hand and had received a 4,000 unit, or 24% increase in pre-orders from 13,000 to over 17,000 for the Air sedan across its several variants. “Lucid’s strong balance sheet following the closing of the merger enabled us to drive the growth of our business and execute on our larger mission to inspire the adoption of sustainable energy,” Lucid Group CFO Sherry House said. “Moving forward, we anticipate continuing vehicle deliveries to customers, investing in capacity and capabilities, and providing value to all of our stakeholders.”

Credit: Lucid Group

CEO and CTO of Lucid Group Peter Rawlinson said on the company’s Earnings Call last night that “Lucid is uniquely positioned to capture this opportunity driven by our key differentiators, namely our technology innovation, and the people who work here.” Rawlinson even said that he believes the company’s technology is “worlds apart from even the current market leaders.”

The strong Q3 numbers that the automaker reported on Monday evening were enough for CFRA to boost its 12-month price target of Lucid from $50 to $65 with a “Buy” rating on the stock.

CFRA analyst Garrett Nelson wrote:

“We raise our 12-month target by $15 to $65, based on an estimated ’24 price/sales ratio of 12.0x. We lower our ’21 EPS estimate to ($1.80) from ($1.65) while keeping our ’22-’24 forecasts unchanged. In its first earnings release as a publicly-traded company, LCID posts Q3 adjusted EPS of ($0.43), short of the ($0.22) consensus. LCID said its customer reservations increased to over 17k units in Q3 and it remains confident in its ability to deliver 20k units in 2022. We think the fact the Lucid Air was just named MotorTrend’s 2022 “Car of the Year” will help its reservation count accelerate further in Q4.”

Nelson also believes that Lucid, despite only delivering a few cars thus far, is capable of being in the same league as Tesla moving forward. While Lucid will not catch up to Tesla in terms of automotive production capacity for at least a decade, the things Lucid brings to the table in terms of EV metrics are competitive and can give some consumers a tough decision on what vehicle they would prefer purchasing.

“LCID made history by becoming the first automaker to win the coveted award with its first model. LCID ended the quarter with ample cash of $4.8B, or almost 20x its adjusted EBITDA burn in Q3,” Nelson wrote. “As LCID has the only EV model in the marketplace in the same league as a Tesla product in terms of range, horsepower, and other qualities and various other advantages over other EV upstarts, we remain bullish on the stock.”

Nelson has a 67% success rate and an average return of 0.1%, according to TipRanks. He is ranked 5,576 out of 7,729 analysts.

Lucid stock closed at $55.52, up over 23.7% during Tuesday’s trading hours.

Disclosure: Joey Klender is not a LCID Shareholder.

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Lucid Group’s strong Q3, MotorTrend award boost CFRA price target
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