Luminar’s stock is forecast to reach $30 by December 2023. Here, a photo of a Luminar Lidar-based sensor on a test vehicle.
Patrick T. Fallon/AFP via Getty Images
The autonomous vehicle tech firm Luminar Technologies will likely be the largest pure-play supplier of radar for self-driving cars, while Velodyne Lidar may miss out, analysts at J.P. Morgan say.
In a research note beginning coverage of the stocks, analyst Samik Chatterjee and his team rated Luminar at Overweight, equivalent to a Buy rating, giving Velodyne shares a rating of Underweight, or Sell. Both companies sell Lidar, or light detection and ranging technology, which auto makers use to give cars, essentially, the eyes they need for autonomous driving features. Lidar is particularly good at tracking objects a long distance away.
Debate about what Lidar is best is rife within the automotive industry, but J.P. Morgan analysts have made their decision when it comes to the winner for the next decade. Chatterjee believes Luminar (ticker: LAZR) will exit 2030 with the strongest revenue among its peers given the company’s focus on so-called Level 3-plus applications.
There are five levels of driver-assistance technologies; levels before the third are more dependent on human supervision. Level zero is a manually controlled car. Mercedes-Benz , which recently partnered with Luminar, was the first automotive manufacturer to secure a Level 3 certification late last year.
Chatterjee forecasts $6 billion of revenue for Luminar and industry-leading profitability of close to $7.25 per share in 2030. Luminar currently trades at $9.52, after falling 44% this year. Analysts have a December 2023 price target of $30 on the stock.
Velodyne (VLDR), the analysts say, has had limited success in securing partnerships with players in the auto industry. “[W]e expect the company to struggle to translate its leadership in LiDAR for broader industrial applications into the largest revenue opportunity, the automotive market,” the analysts said.
Velodyne’s spokesperson told Barron’s that the automotive market offers enormous potential over the long-term and the company sees near-term opportunities in the industrial/robotics and intelligent infrastructure markets. Velodyne’s lidar sensors have been used in the digital mapping of rural road networks in Scotland.
In the second quarter, half of Velodyne’s revenue was from the autonomous vehicles market, specifically robotaxis and autonomous shuttles, which are primarily prototype designs. The taxis and shuttles are still some years away from full production, the spokesperson said.
J.P. Morgan forecasts 2030 revenue of $806 million for Velodyne, with earnings of less than $1 a share. The stock trades at $1.06. It has fallen 77% this year.
Luminar and Velodyne aren’t alone in the Lidar business. Other stocks in the sector include Cepton (CPTN) and Innoviz (INVZ).
Write to Karishma Vanjani at karishma.vanjani@dowjones.com
Source: finance.yahoo.com