Lucid Group Faces Downgrade, Rivian Automotive Receives Upgrade

Introduction

The electric-vehicle start-up, Lucid Group, is experiencing a setback due to a recent downgrade from Exane BNP Paribas analyst James Picariello. Meanwhile, Picariello's upgraded stance on Lucid's competitor, Rivian Automotive, is not providing the expected boost.

Lucid Group Downgrade and Rivian Automotive Upgrade

On Friday, Exane BNP Paribas analyst James Picariello downgraded Lucid stock (ticker: LCID) from Hold to Sell. Simultaneously, he lowered the price target from $6.50 to $5. In contrast, Picariello upgraded shares of Rivian stock (RIVN) from Hold to Buy. He also increased his target price for Rivian to $30 from $24.

Market Response

In response to the downgrade, Lucid stock has declined by 3% in midday trading, currently valued at $6.58 per share. Similarly, Rivian stock is also down by 1.3% at $21.62. Comparison-wise, the S&P 500 and Nasdaq Composite have experienced declines of 0.3% and 0.7% respectively.

Analyst Consensus and Target Prices

Analyst James Picariello's views seem to align with the majority of analysts covering Lucid stock. Currently, only 31% of these analysts have Buy ratings for Lucid. In comparison, the average Buy-rating ratio for stocks in the S&P 500 stands at around 55%. The recent downgrade affects the Sell-rating ratio as approximately 23% of analysts now rate Lucid shares as Sell. The average Sell-rating ratio for S&P 500 stocks is approximately 6%. Furthermore, the average analyst target price for Lucid stock is approximately $775 per share, reflecting an approximate 18% increase from recent trading levels.

Rivian, on the other hand, enjoys more positive sentiment from analysts, with around 58% providing Buy ratings. The average analyst target price for Rivian stock is approximately $27.50 per share, representing a roughly 25% increase from current levels.

Analysis of Production and Delivery Performance

The recent ratings changes could be attributed to the differing production and delivery performance of Lucid and Rivian.

In the second quarter of 2023, Lucid delivered 1,404 vehicles, slightly fewer than their first-quarter deliveries of 1,406. However, the company has plans to manufacture 10,000 units in 2023.

On the other hand, Rivian's second-quarter deliveries significantly surpassed their first-quarter numbers, with 12,640 vehicles delivered. As part of their future plans, Rivian aims to produce over 50,000 units in 2023.

Despite these divergences in performance, Lucid and Rivian have similar market valuations. Lucid's market value, calculated through stock capitalization minus debt and cash on hand, is currently valued at around $12 billion. Meanwhile, Rivian's market value sits at $13 billion.

Based on Picariello's prices, Rivian's market value would be approximately $18 billion, while Lucid's market value would amount to around $9 billion.