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Today is shaping up negative for Lucid Group, Inc. (NASDAQ:LCID) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.
Following the downgrade, the current consensus from Lucid Group's 13 analysts is for revenues of US$735m in 2024 which - if met - would reflect a decent 19% increase on its sales over the past 12 months. The loss per share is expected to ameliorate slightly, reducing to US$1.09. However, before this estimates update, the consensus had been expecting revenues of US$889m and US$1.07 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.
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The consensus price target fell 7.5% to US$3.02, implicitly signalling that lower earnings per share are a leading indicator for Lucid Group's valuation.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Lucid Group's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Lucid Group's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 26% growth on an annualised basis. This is compared to a historical growth rate of 81% over the past three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 13% annually. So it's pretty clear that, while Lucid Group's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Lucid Group. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Lucid Group after today.