Price Forecast Revision Amid Licensing Discussions
RBC Capital Markets analyst, Tom Narayan, maintained a Sector Perform rating on Lucid Group, Inc. (LCID), but significantly decreased the price forecast from $6 to $3. Narayan highlighted that although Lucid’s management is in talks with major Original Equipment Manufacturers (OEMs) for licensing, these discussions have been reactionary rather than proactive.
Adjustments in Valuation Metrics
The analyst revised the Cars per/share value to $0.93 from $1.42, attributing the change to a reduction in the EV/Sales multiple from 1.5x to 1x. Narayan pointed out that the recent Aston Martin supplier deal piqued OEM interest, even though it was not a licensing agreement.
Lowered Licensing Outlook
Narayan also decreased the Licensing/share value to $2 from $4, reflecting lower expectations of increased licensing penetration until concrete deals are finalized. Despite this, Lucid remains optimistic that its Gravity and Mid-size vehicle offerings will improve demand for its sedans.
Technological Efficiency and Market Competition
The analyst highlighted that Lucid’s technology is 12%-23% more efficient than Tesla Inc. (TSLA) and over 30% more efficient than other OEMs. In February, Lucid reduced the price of its base Lucid Air Pure model, aiming to compete with vehicles like the Mercedes E Class and the BMW 5-Series. Narayan cautioned that Lucid will be entering a saturated market with its upcoming mass-market SUV targeting the $60k price point.
Future Revenue Projections
Narayan predicts Lucid to sell 80k units in 2029, constituting over 50% of the company’s total revenue by that time. Despite these forecasts, LCID shares dipped by 0.80% to $3.095 by the end of the trading week.
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