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Lion Electric stock forecast: Will LEV stock benefit from the Biden administration’s electric school bus push?

By Rob Griffin

Edited by Jekaterina Drozdovica

18:05, 31 October 2022

Financial stock market graph. 3d illustration
Will LEV stock benefit from the Biden administration’s electric school bus push? Photo: Explode / Shutterstock

Lion Electric (LEV), the Canadian commercial electric vehicle (EV) maker, could benefit from US President Joe Biden’s $5bn clean school bus program. 

Investors in the loss-making designer and manufacturer have endured a tough 12 months, with the stock price having fallen 80%.

Global supply chain issues and analysts’ concerns over the company’s longer-term capital expenditure requirements are among the key reasons for the fall. However, analysts are predicting brighter days ahead with an increased demand for EVs expected to help lift the LEV stock price over the coming months.

In this Lion Electric stock forecast, we take a look at the company’s recent results, what President Biden’s announcement could mean and the stock price.

What is Lion Electric? 

Lion Electric is a Canadian designer and manufacturer of electric medium and heavy-duty urban vehicles. 

As of October 2022, its line-up consists of seven mid-range truck and bus models, while a further eight are expected to be launched over the next couple of years. The company stated that 700 of its vehicles were on the road, with more than 10 million miles driven between them.

Lion Electric went public on 7 May, 2021 after completing its merger with the special purpose acquisition company (SPAC) Northern Genesis Acquisition. Its stock is traded on both the New York Stock Exchange (NYSE) and the Toronto Stock Exchange (TSX) under the symbol LEV.

What’s happened to the stock price?

Any LEV stock forecast has to consider recent performance and it’s certainly been a depressing year for the company’s investors. 

The LEV stock price has fallen 72% from $9.99 at the start of 2022 to $2.82 as the market closed on 28 October. Its performance over 12 months has been worse, with the stock down 80% from its $14.25 level at the end of October 2021.

Lion Electric’s stock tumbled 55% in the wake of its second quarter results announcement in early August 2022. 

As with many companies in this rapidly growing electric vehicle sector, analysts expect the company’s future development plans to require significant capital.

It’s also worth noting that global stock markets haven’t exactly been keen on growth companies this year, which could be another contributing reason for the stock’s performance.

Lion electric stock price 2020-2022

Latest earnings

In early August 2022, Lion Electric reported revenue of $29.5m for the second quarter of the year – an increase of $12.8m over the $16.7m achieved in the corresponding quarter last year. It delivered 105 vehicles during the period  – 44 more than for the  second quarter of 2021.

The company revealed adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of -$14.4m, which was worse than the -$5.5m in quarter two in 2021. 

The company attributed this to certain non-cash items, such as “change in fair value of share warrant obligations” and share-based compensation.

Meanwhile, capital expenditures hit $44.3m, compared to $3.3m for the same period last year, and included costs related to its Joliet manufacturing facility and the Lion Campus. 

A deeper analysis of the results highlighted how the cost of sales for the six months to the end of June 2022 amounted to $56.5m – an increase of $32.7m over the same period in 2021. The company noted that the increase was primarily due to increased sales volumes and higher production levels. 

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It also flagged higher fixed manufacturing and inventory management system costs related to the ramp-up of production capacity for future quarters, as well as ongoing global supply chain issues.

Chief executive Marc Bedard, the company’s founder, said he was pleased with the performance as the company had delivered a record number of vehicles for the third consecutive quarter. He stated:

“As we are nearing the start of operations at our US manufacturing facility and our battery plant, we also decided to adjust the cadence of our capital spend…This will enable us to accelerate return on investment and optimally manage our capital resources.”

Biden’s push for electric school busses

US President Joe Biden’s clean bus push could be a positive driver for the LEV stock price over the coming months. 

The $5bn Clean School Bus Program is part of his broader Bipartisan Infrastructure Law to provide significant investment for the country’s infrastructure. It aims to reduce greenhouse gas emissions, save money for school districts, and produce cleaner air, according to the US Environmental Protection Agency (EPA). 

On 26 October, the announcement of 391 rebate awards, totalling nearly $1bn, were made in this program. This is the first instalment of $5bn over the next five years. The awards, going to school districts in all 50 states and Washington DC, in addition to several US territories, will support the purchase of 2,463 buses, 95% of which will be electric. The districts receiving an award can now proceed with purchasing new buses and eligible infrastructure.

Lion Electric’s Marc Bedard said it was fantastic to see funds being awarded and that he was excited to see “the massive interest in clean school buses” across all 50 states. He added:

“Lion would like to congratulate the EPA along with the awardees, who will soon benefit from the adoption of zero-emission school buses.”

Bedard’s statement emphasised how Lion was the “leader in all-electric school buses” and was at the forefront of the market, having put its first vehicles on the road in 2016, noting:

“Lion saw the opportunity for all-electric school buses in the market over a decade ago when we began developing our technology and started the zero-emission school bus revolution, and today we are seeing the results in large-scale adoption, for the benefit of the health of our children, our communities and the environment.”

Lion Electric stock forecast: Where will the price go next?

So, what are the Lion Electric stock predictions of stock market analysts?

The stock was a ‘hold’, according to 11 analyst ratings compiled by MarketBeat in its Lion Electric share price forecast of 31 October.  Six of them rated it as a ‘buy’, four as a ‘hold’,and the remaining one a ‘sell’. 

Their consensus LEV stock price target was for the company to hit $8.05, which would represent a 185.30% premium over the $2.82 closing price on 28 October. The highest target came in at $13, while the lowest suggested an 11% fall to $2.50.

The stock was rated as a ‘strong buy’, according to the Lion Electric stock forecast 2022 on TipRanks at the time of writing (31 October), based on eight Wall Street analysts offering 12 month price targets. 

Their average price target was $7.44, with a high forecast of $13.00 and a low of $2.50. The average price target represented a 163.83% change from the last closing price of $2.82.

Over the past month, Christopher Souther of B.Riley Financial initiated coverage of the stock with a ‘buy’ recommendation and price target of $5.

The most recent movement, meanwhile, came from analyst George Gianarikas of Canaccord. In his Lion Electric stock forecast, he downgraded it from ‘buy’ to ‘hold’, with a price target of $2.50.

However, the LEV stock forecast of Wallet Investor, the algorithmic forecaster, made for gloomy reading. The site declares it a “bad long-term investment”, with its Lion Electric stock forecast 2025 has the price flatlining at 0.000001 by October 2025.

Note that analysts’ and algorithm-based forecasts can be wrong. Their Lion Electric stock forecasts shouldn’t be used as a substitute for your own research. Always conduct your own due diligence before trading, looking at the latest news, technical and fundamental analysis and a wide range of analyst coverage. Remember, past performance is no guarantee of future returns. And never trade money you cannot afford to lose.

FAQs

Is Lion Electric a good stock to buy?

Whether LEV stock is a good investment for you will depend on your own investment objectives and your research on the company. Remember, it’s very important to form your own opinion of a company’s prospects and not rely solely on analysts’ opinions. Remember, past performance is no guarantee of future returns. And never trade money you cannot afford to lose.

Will Lion Electric stock go up or down?

No-one knows for sure. However, the consensus view of 11 analysts, compiled by MarketBeat, as of 31 October, was for the price to hit $8.05 over the coming year. The highest target came in at $13, while the lowest suggested $2.50. Note, however, that their predictions can be wrong and you should always conduct your own research.

Should I invest in Lion Electric stock?

This depends on your view of both the company and electric vehicles. It’s important to remember that this is still a developing industry and the growth of manufacturers in this area is likely to be rather volatile. Always conduct due diligence before investing.

Remember, past performance is no guarantee of future returns. And never trade money you cannot afford to lose.

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