Al Root

Shares of electric-vehicle start-up Lucid Group rose early Tuesday after catching a Wall Street upgrade.

The company has artificial-intelligence optionality. However, Morgan Stanley analyst Adam Jonas isn't buying the stock just yet.

Monday afternoon, Jonas upgraded Lucid stock to the equivalent of Hold from Sell. His price target stayed at $3.

Lucid stock was up 2.8% in premarket trading at $2.22 a share, while S&P 500 and Dow Jones Industrial Average futures were down 0.3%.

An upgrade with no change in price target reflects what's been going on recently in shares. Coming into Tuesday trading, shares were down about 28% year to date, and down about 51% from the 52-week high set in August. Slowing EV sales growth and more EV competition have weighed on investor sentiment.

Jonas is hopeful new management can reinvigorate the company. In February, the company named Marc Winterhoff as the successor to founder and CEO Peter Rawlinson, who is transitioning to the role of strategic technical advisor.

"Lucid has the opportunity to execute an AI strategy leveraging strategic/sovereign partnerships within the context of the urgency to develop onshore manufacturing capacity," wrote Jonas.

Jonas envisions U.S.-made Lucid vehicles using AI developed abroad or domestically, helping boost company vehicle sales. The first AI application for the auto industry is typically advanced driver assistance features.

Funds controlled by Saudi Arabia own a majority of Lucid stock. That ownership could facilitate non-U.S. AI partnerships, according to the analyst.

Overall, only three of 17, or 18%, of analysts covering Lucid stock have Buy ratings. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst price target for Lucid stock is about $2.80.

An upgrade to Hold from Sell doesn't change the Buy-rating ratio. Now, about 24% of analysts covering Lucid stock rate shares sell. The average Sell rating ratio for stocks in the S&P 500 is closer to 5%.

Write to Al Root at allen.root@dowjones.com

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March 18, 2025 09:23 ET (13:23 GMT)

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