Aiming to provide a high-resolution 3D image of their environment, LiDAR (light detection and range) sensors are becoming a mainstay in autonomous vehicles.
While not all proponents of the technology have been — for example, Elon Musk has stated in the past that he’s not a fan — JP Morgan analyst Samik Chatterjee says the “debate over the added value of a LiDAR in a sensing suite has long settled down.” .”
The decision to opt out of lidar is more about cost than performance, though the jury is still out on the ‘winning technology approach’.
That said, as far as Chatterjee is concerned, the answer is pretty clear.
“We believe the real differentiation remains in a powerful, forward-thinking LiDAR that can handle both L2 ADAS and L3+ highway autonomy, enabling automakers to prioritize safety with ADAS while selling a premium option in L3 highway driving,” the analyst said.
Against this background, Chatterjee has picked up this thread and followed it to the logical conclusion: pulling the trigger for LiDAR stocks he sees as winners in the future. In fact, the analyst sees that a given pair of stocks will yield gains of more than 200% in the coming year.
And turns out he’s not the only one; using the TipRanks database, we can see that both are rated as Strong Buys by the analyst consensus. Let’s take a closer look at that.
Luminous technologies (LAZR)
We start with Luminar, one of the first lidar companies to go public in December 2020, following a SPAC merger with Gores Metropoulos. The company has established itself as a leader in this burgeoning space with a focus on bringing mass-produced automotive products to market without breaking the bank. The technology was designed with a broad task in mind, suitable for both passenger cars and commercial trucks.
The company has switched from its old Hydra system to the more capable Iris and the auto industry is clearly impressed. Luminar has already made deals with several OEMs, including fixtures like Nissan, Volvo and Mercedes.
Industry interest was reflected in growing sales, as presented in the latest set of quarterly results for 2Q22. Sales reached $10 million, up 57% from the same period last year and surpassing the street’s forecast of $8.52 million. In the end, there was not much success, with earnings per share of -$0.27 falling short of the -$0.24 analysts had expected.
However, the company raised its revenue outlook for the full year 2022 from $40 million to between $40 million and $45 million. Consensus was seeking $41.35 million.
JP Morgan’s Chatterjee believes much more growth is in the cards, believing that the company is “positioned not only as an industry leader in LiDAR technology, but more broadly in autonomous driving technology.”
“We predict Luminar will close the decade with the highest revenue among the peer group and the company will have multiple levers to match the consensus and implied goal of $4.5 billion and $5 billion by 2030, respectively,” explained Chatterjee out. “Luminar has the highest win count for a standalone LiDAR company, including with both traditional and non-traditional OEMs, and also has software revenue prospects with investments in software stack with Zenseact, greatly expanding revenue opportunities for the company to peers. that only focus on hardware differentiation.”
To this end, Chatterjee thinks LAZR has a long way to go, and somehow we mean 282% of upside potential. Those are the returns investors will be looking at if the stock hits the Chatterjee’s Street high price target of $30. No need to add that the analyst rating is an Overweight (ie Buy). (To view Chatterjee’s track record, click here)
Overall, with 9 recent analyst reviews, including 7 purchases and 2 held, LAZR has earned its analyst consensus rating for Strong Buy. The shares are selling for $7.86 and their average price target of $16.78 implies an increase of ~113% for the next 12 months. (See Luminar’s stock forecast on TipRanks)
Innoviz technologies (INVZ)
The next pick from JPMorgan that we look at is Innoviz Technologies. The company currently has two LiDAR hardware systems available, the first generation InnovizOne and the second generation InnovizTwo. These products have been tested and used in a range of driving applications and conditions, including robotic axis, sidewalk delivery technology, industrial drones and consumer vehicles, as well as heavy duty trucks, industrial equipment and commercial drones. Both systems are compatible with level 3-5 autonomous vehicles. Innoviz’s LiDAR systems can be supplemented with the company’s Perceptions software package.
The company’s next lead product, the ‘next generation’ Innoviz360, is currently being finalized for both automotive and non-automotive applications. It is scheduled for marketing in the fourth quarter of this year.
For companies trying to break into a new segment, getting big wigs from the industry on board is vital. This is something Innoviz already seems adept at. Innoviz was the first company to achieve an L3 LiDAR design win with BMW, which was recently followed by the news that Volkswagen subsidiary CARIAD has chosen the company as the LiDAR sensor and software supplier for all AVs under the Volkswagen brand. This is a big catch and one that lifted the forward-looking order book from $2.6 billion to $6.6 billion.
However, it’s too early for this company in terms of revenue, with revenue of just $1.79 million in 2Q22. Nevertheless, that amounted to an increase of 77.2% year-on-year.
While Chatterjee thinks the company only has a “narrow portfolio” of hardware products, he emphasizes the fact that Innoviz is currently building the “largest order book in pure play public LiDAR companies.”
“In addition,” the analyst continued, “beyond the expansion opportunities with Volkswagen with more brands and more vehicle models signing up to leverage the platform being established by CARIAD, we also expect to accelerate the pace of wins with existing and potential new customers.” accelerate after validation by two major automotive OEMs.We expect the combination of numerous wins, high volumes, a balance between LiDAR cost and performance, and the ability to support highway autonomy at high speeds, will position Innoviz to extend revenues far by the end of the decade, while cost discipline should drive profitability.”
As such, Chatterjee gives an Overweight (ie Buy) rating on Innoviz stock, along with a price target of $22. If that figure is met, investors can count on a massive 316% return from now on.
Do other analysts agree with Chatterjee? It turns out they do. With 100% Street support, or 4 buy ratings to be exact, the message is clear: INVZ is a strong buy. At $8.67, the average price target estimates the upside potential at ~64%. (See Innoviz stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are those of the featured analyst only. The content is for informational purposes only. It is very important to do your own analysis before making any investment.