Shares of
Rivian Automotive
and
Lucid
Group picked up new ratings. One’s better than the other, but shares of both electric vehicle start-ups are rising in early trading.
Wednesday evening, Stifel analyst Stephen Gengaro launched coverage of Rivian stock with a Buy rating and $23 price target, and initiated Lucid stock with a Hold rating and $5 price target.
The “key positives” for Rivian include high brand awareness, and cost-cutting that can reduce operating losses, wrote Gengaro. The positives for Lucid include attractive vehicles and Saudi backing. Public Investment Fund, a Saudi sovereign-wealth fund, is the largest holder of Lucid stock with a 60.6% stake, according to Lucid’s latest proxy.
“Large ownership by deep-pocketed Saudi PIF fund supports capital needs,” the analyst wrote. “Large order from Saudi [government] supports growth.”
But Lucid needs lower-priced vehicles to sell more cars and those are probably “two to four years away,” he added in his report. Lucid has sold about 4,300 vehicles through the first three quarters of 2023. Rivian has sold about 36,000.
Gengaro ratings align with his Wall Street peers. Almost 70% of analysts covering Rivian stock rate shares Buy. The average Buy-rating ratio for stocks in the
S&P 500
is about 55%. Only one, or 6%, of the analysts covering Lucid, has a Buy rating.
The average Rivian stock price target is about $26, while the average Lucid price target is about $5.30.
Strategy, product lineup, competition, and other factors can all determine ratings. So can valuation. Lucid stock, including the company’s debt and cash, trade for about six times estimated 2024 sales, while Rivian stock trades for about two times.
Neither company has a price-to-earnings ratio because neither is profitable.
Rivian stock was up about 2.4% at $18.82 a share in premarket trading while S&P 500 futures were flat and
Nasdaq Composite
futures were up 0.2%.
Lucid stock was up 1.4% at $4.47 a share. Lucid stock has been badly beaten up and at least a Hold rating isn’t a Sell rating.
Coming into Thursday trading, Lucid stock was down almost 50% over the past 12 months. Rivian shares were down about 34%. Higher interest rates and more EV competition have sapped some investor enthusiasm for shares of start-up players that don’t make money.
“Electric-vehicle sales have faced stiff headwinds recently, driven by both macroeconomic factors…as well as EV-specific headwinds including range anxiety, vehicle costs, model availability, and charging infrastructure,” added Gengaro. “We believe these EV hurdles will shrink over the next few years, paving the way for sales growth.”
That outlook is good news for all EV players.
Write to Al Root at [email protected]
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