Lucid stock sets a record win streak as a rising EV tide helps investors shrug off a Citi downgrade

By Tomi Kilgore

Citi's Itay Michaeli resumes coverage with a neutral rating, down from previous buy rating, but stock rises to a 6th-straight gain

Shares of Lucid Group Inc. surged Monday to a sixth-straight gain, as a broad rally in the stocks of fellow electric-vehicle makers helped distract investors from a downbeat analyst note.

Lucid's stock (LCID) charged up 7.3% to close at $7.39, and has powered up 35.1% amid a six-day win streak. That's the longest win streak since the California-based EV maker went public on July 26, 2021 through a merger with a special-purpose acquisition company (SPAC).

It was also the stock's best six-day performance since it ran up 36.1% during the six-session stretch that ended Jan. 26, 2023.

Citi Research's Itay Michaeli resumed coverage of Lucid's stock with a neutral rating and $8 stock price target. Prior to a two-month period of being not rated, Michaeli had rated the stock at buy with an $11.50 price target.

Despite the effective downgrade, Lucid's stock rallied, after upbeat delivery and production data from a number of other EV makers fueled a rally in the sector. Among those that reported data, shares of Tesla Inc. (TSLA) ran up 6.9%, China-based Nio Inc. (NIO) jumped 3.5% and Rivian Automotive Inc. (RIVN) powered up 17.4%.

Citi's Michaeli said in a Monday note that while he remains "constructive" on Lucid's technology relative to its peers, which was recently validated with the supply agreement with U.K.-based luxury automaker Aston Martin Lagonda Global Holdings PLC , there's some uncertainty regarding near-term demand for the Lucid Air EV and the company's gross margin performance.

"To that, our latest 3rd-party data checks weren't discouraging but didn't quite give us sufficient conviction either, so we opt to wait for an opportunistic entry point," Michaeli wrote in a note to clients.

Meanwhile, said recent price cuts to rival EV models, such as those by Tesla Inc. (TSLA), and the time until the new Gravity sport-utility vehicle (SUV) arrives, adds risk to Lucid's gross margin outlook.

The company said the Gravity luxury SUV will arrive in 2024.

"We look for signs of strong demand/brand momentum for the Lucid Air, gross margin progression and greater visibility around the 2024 launch of the Gravity SUV," Michaeli wrote.

Lucid's stock has lost 6.5% over the past three months, while Global X Autonomous and Electric Vehicles exchange-traded fund (DRIV) has rallied 13.1% and the S&P 500 index has gained 8.7%.

-Tomi Kilgore

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07-04-23 0940ET

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