EV startup
Lucid
picked up another rating from Wall Street. It isn’t a Buy. Still, RBC analyst Tom Narayan has an interesting idea for the company to generate value: licensing its technology.
Narayan launched coverage of Lucid Friday, He rates shares Hold and has a $6 price target for the stock.
Hold ratings don’t typically help stocks. Lucid is up a little in premarket trading, by 0.3% at $6.02 a share.
S&P 500
and
Nasdaq Composite
futures are both down 0.2%.
There are some interesting tidbits in Narayan’s report for investors to consider though. He calls Lucid a technology leader “based on an apples-to-apples comparison of efficiency and work by Munro & Associates.” Munro is an automotive consultant who tears down cars to understand manufacturing and product technology.
Lucid EVs get a lot of range per unit of battery capacity, but that hasn’t been enough to boost sales. Quarterly sales for Lucid peaked in the fourth quarter of 2022 at 1,932 units. Sales in both the first and second quarters have come in at about 1,400 units. “Lucid branded products are compelling but do not have enough traction and momentum to warrant much value today,” added Narayan in his initiation of coverage report.
One potential solution to generate value is to license its technology, which could be worth up to $15 a share. “Our theoretical math suggests that mass market [automakers] stand to add 50% to 70% to [EV operating profits] if adopting Lucid,” adds the analyst.
It’s aggressive math. Of course, operating profit margins going from 1% to 1.5% is a 50% improvement. Still, at $15 a share, Lucid licensing would be worth roughly $35 billion, or more than twice as valuable as automotive parts giant
Magna International
(MGA) and more than autonomous driving technology company
Mobileye
(MBLY).
Lucid has licensed technology to
Aston Martin
(AML.London) demonstrating the viability of his idea. Still, Aston is a niche automaker that doesn’t generate free cash flow. Its shares are down more than 90% over the past five years.
Narayan’s rating is the second this week for Lucid. Wednesday, Baird analyst Ben Kallo launched coverage with a Hold rating and a $7 price target.
Now 15 analysts cover Lucid stock, according to FactSet. One-third or 33% rate shares Buy. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst price target is about $7.40 a share.
Coming into Friday’s training, Lucid stock is down about 60% over the past 12 months. Rising interest rates and slowing sales growth have sapped some investor enthusiasm.
Write to Al Root at [email protected]
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