Baird has initiated coverage on luxury EV maker, Lucid Group (NASDAQ:LCID) with a Neutral rating and has set a 12-month price target for the stock at $7.00.
In Q123 and Q223, LCID managed to deliver 60.8% and 64.6% of the vehicles they made, giving them total deliveries of 1,406 and 1,404 units in those respective quarters. While some variation is expected because of things like vehicles in transit and logistical issues, the large difference and growing inventory has raised concerns about demand.
Analysts wrote in a note, “LCID's performance is among the best; however, high starting prices and a niche market segment create a challenging near-term setup, in our view.”
Baird anticipates a rapid enhancement in gross margins on a unit basis as LCID optimizes its manufacturing processes through automation and concludes its factory enhancements in Casa Grande.
Baird has formulated projections of favorable gross margins at the corporate level by Q3 2025, achieving adjusted EBITDA positivity by Q3 2026, and attaining positive earnings per share by Q1 2027. Baird also suggests that the impact of factory upgrades causing margin declines will be most pronounced in the short term.
Shares of LCID are down 0.17% in pre-market trading on Wednesday.