There's no question that Lucid Group (LCID 0.18%) has struggled of late. Like much of the electric vehicle (EV) industry, the stock price is down on disappointing sales results and industrywide price cuts. The price has fallen nearly 64% over the past year.
However, at least one Wall Street analyst sees some upside to the luxury EV maker. Citigroup recently resumed coverage of Lucid stock with a neutral rating and a price target of $2.90, giving it a 14% upside over the next 12 months from its current level.
Image source: Lucid.
Citi is bull-ish on Lucid
While a neutral rating might not inspire much confidence from investors, the price target indicates a favorable expectation for Lucid, which is rapidly losing money, much like other EV start-ups.
The bank said the risk/reward in the stock seemed to be fair and credited Lucid's strong technology position. However, it noted challenges with demand and pressure on its launch of the Gravity SUV model, expected later this year.
Can Lucid bounce back?
At this point, a lot seems to need to go right for Lucid to have long-term success and top the analyst's target. The company seems to be far away from its break-even point, having delivered just 6,001 vehicles in 2023, and demand seems to be weakening for its high-priced sedans, as it produced 8,428 cars last year. For 2024, it's aiming to produce 9,000 cars, which is only 6.8% growth.
However, Citi is correct that Lucid's technology stands out in a crowded industry as its Air sedans have the longest range of any EV on the market. It has won several awards, including the 2023 World Luxury Car of the Year. It also licenses its technology to Aston Martin, and licensing could prove to be a more viable business model for the company. Lucid could also make for an intriguing acquisition target for a luxury carmaker.
While the company does have potential, it's clear from its current financials, growth trajectory, and industry challenges that something will have to change in order for it to survive and thrive.
