SPAC mergers and new vehicle tech, two on-point trends which both apply to lidar maker Velodyne Lidar (VLDR). The company went public via the blank check route at the end of September, yet with so many SPAC and EV focused companies currently saturating the market, it is getting increasingly hard to separate the wheat from the chaff.
So, is Velodyne just representative of current trends or does it have what it takes to cement a position as a real player in the upcoming autonomous revolution?
Needham analyst Rajvindra Gill thinks the latter holds true.
“Velodyne has established a clear first mover advantage in the LiDAR category (light direction and ranging), which is a critical technology for advanced driver assistance systems (ADAS), autonomous vehicles (AVs) and non-automotive applications (last mile delivery, warehousing, mapping and urban security),” the analyst said. “We see Velodyne as a 40%+ growth company driving to a 54-55% GM and 17-18% OM.”
By 2024, as costs decline to sub $600 levels, Gill anticipates lidar will be in 60% of L2+/L3 ADAS vehicles. Velodyne is well positioned to capitalize; By the end of November, the company had already signed 24 multi-year contracts and has a “growing customer base of global OEMs and 175+ projects in the pipeline.”
However, the lidar opportunity is not reserved only for the auto industry. Gill anticipates further adoption in non-automotive applications such as warehousing, mapping, urban security and smart city, will generate over 50% of sales.
To this end, Gill rates Velodyne shares a Buy along with a $30 price target. This figure implies a 25% upside from current levels. (To watch Gill’s track record, click here)
Gill is not the only analyst attuned to the Velodyne opportunity. The company is also drawing praise from Craig-Hallum analyst Richard Shannon, who believes “VLDR deserves a place in any growth portfolio.”
Like Gill, Shannon highlights Velodyne’s first mover advantage, noting the company has the “strongest customer engagement pipeline in the industry, while few other suppliers have any announced contracts.”
Furthermore, while Velodyne is currently perceived as primarily a hardware supplier, its proprietary software adds extra “stickiness.”
By the end of the decade, Shannon expects the lidar market to be worth $150 billion, and with VLDR the “first pure-play LiDAR company to market,” he recommends the stock as a “potential long-term holding for investors that want access to companies that are drivers for the Age of Autonomy.”
It should come as no surprise, then, that Shannon stays with the bulls. In addition to a Buy rating, he gives the stock a $23 price target. (To watch Shannon’s track record, click here)
Turning now to the rest of the Street, where considering Velodyne’s trajectory, the analysts are in full agreement. All current reviews – 5, in total – say Buy. The Strong Buy consensus rating is backed by a $25.75 average price target, suggesting upside of ~8% over the next 12 months. (See VLDR stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.