Lion’s quarterly results were in line with expectations. (Picture: courtesy)
What to do with Lion Electric, Transat AT and Gap titles? Here are some recommendations from analysts likely to move prices soon. Note: the author may have a totally different opinion from that expressed.
Lion Electric: (LEV, US$2.11, CA$2.96): Capital expenditure will be twice as high as expected in 2023
The electric bus and truck manufacturer presented its results for the fourth quarter of 2022 on Friday, and these were largely in line with expectations. The company is making progress, but its capital spending will be higher in 2023 than analysts expected. The share price lost 3.21% during the session following the announcement of the results.
Revenues in the fourth quarter totaled US$46.8 million (M$), which is more than double the corresponding quarter of the previous year, notes Benoit Poirier, analyst at Desjardins Securities. And that compares to $41M in the third quarter. Analysts’ consensus was for revenues of $47.3 million.
The company delivered 174 vehicles during the quarter, which is slightly lower than the Desjardins analyst’s forecast of 176 vehicles. Like many, it has not been spared supply chain issues that have forced it to delay the final assembly of some vehicles, notes the analyst.
However, the losses were lower than expected. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were negative at US$13.9 million, while analysts’ consensus had forecast a negative figure of US$17.8 million. At the end of the quarter, Lion employed 1,400 people, 50 more than at the end of the previous quarter.
Backlog as of March 9 totaled 2,468 units compared to 2,408 on November 9. However, this is lower than the analyst’s forecast, which was for 2,682 units.
Following an equity issue during the quarter, the company’s cash position is currently US$88 million, compared to US$67 million in the prior quarter. Management announces that it plans to make capital expenditures of $65 million in 2023, double the amount estimated by Benoit Poirier. But he believes that these investments will be beneficial for the firm in the long term.
While noting its speculative nature, he still recommends buying the security, but nevertheless reduces his target price from US$7.00 to US$5.50.
