Lucid Group (LCID 1.53%) stock has continued to decline in 2025 after a nearly 30% drop in 2024. But one Wall Street analyst thinks that shares of the electric vehicle (EV) maker have fallen too far.

Benchmark EV sector analyst Mickey Legg initiated coverage of Lucid with a "buy" rating and a $5 price target, according to reports. That price target implies that the stock has the potential to gain about 80% from recent levels even after a positive response to Legg's report.

Lucid is "well positioned"

Lucid has focused on the luxury EV market thus far. It has now added its luxury Gravity SUV to an EV lineup that previously included several trims of the Air sedan. Success in that niche market has been hampered by a slowdown in EV sales growth. But Legg thinks that 2024 will represent a trough, and EV demand will accelerate in 2025 and beyond. Legg summarized his view in a report, writing:

We view Lucid as well positioned to achieve significant share of this burgeoning opportunity based on its advanced technology, well-stocked balance sheet and access to capital, award-winning vehicles, Saudi investment, partnerships, and highly integrated manufacturing capabilities.

Saudi Arabian support has been crucial for Lucid. The Saudi Public Investment Fund (PIF) is Lucid's largest shareholder and has funneled multiple rounds of capital into the company. It also has an existing 100,000-vehicle order for Lucid's electric sedans.

Lucid only delivered about 10,000 EVs in 2024. It's counting on the new Gravity SUV to gain traction with consumers. The company is scheduled to report its full fourth-quarter update on Feb. 25. If investors hear that early interest in the Gravity will help delivery volumes increase meaningfully in 2025, Legg's price target might be achievable.

But investors might be best served by waiting to hear what Lucid management says before jumping into the stock.