First Mover Advantage Gives Velodyne the Edge; Analyst Says ‘Buy’

Lidar technology is already staking its place as one of 2021’s hottest topics.

Autonomous systems that rely on lidar technology are only in their first commercial innings, but more automotive OEMS and suppliers are getting on board, as greater degrees of automation are assimilated into a wider range of vehicles.

By 2030, the TAM (total addressable market) for ADAS solutions is expected to outstrip $150 billion.

One of the names that could bite a decent chunk out of this market opportunity is Velodyne Lidar (VLDR).

The company was the first to commercially supply lidar sensors in 2007 and, in fact, invented Real-Time 3D lidar in 2005.

The latest analyst to get behind the lidar maker is Benchmark’s Ruben Roy. Roy initiated coverage of Velodyne with a Buy rating and $32 price target. This figure implies ~39% upside from current levels. (To watch Roy’s track record, click here)

“Today, VLDR remains the leading supplier of lidar technology with a broad product portfolio and expansive customer list,” the 5-star analyst said. “We expect VLDR to optimize its production process over the next few years and continue to broaden its product portfolio with increasingly affordable products in many form factors.”

Veldoyne estimates that by next year, the TAM for its solutions should land at around $11.9 billion.

The opportunity is not restricted to the automotive segment, but includes other end markets such as industrial, UAV, mobile robots and 3D mapping, all ones where the company “is already actively engaging customers.”

However, new applications which benefit from the use of 3D sensing technologies are cropping up on a regular basis, and Roy thinks, “the overall opportunity could be larger.”

The analyst also points out that in contrast to many of the emerging lidar competitors whose products target “narrow areas of various end markets,” Velodyne is “addressing a broad range of end market applications.”

Add into the mix the “competitive differentiator” of ongoing investments in software solutions, which Roy claims “could drive higher margin incremental revenue growth longer-term.”

And while Velodyne recently lowered its 2020 revenue outlook, due to pandemic-driven headwinds which impacted the fulfillment of various customer orders, Roy sees this issue as merely a “near-term headwind.”

“We believe the Company’s project pipeline remains healthy with a new contract signed during the quarter and with the overall project pipeline continuing to expand,” Roy said. “Our model reflects gradual top-line improvement during the first half of 2021 followed by a stronger recovery during the second half.”

The rest of the Street is reading from the same Velodyne manual. All current ratings – 7, in total –  consider the stock a Buy. A $28.83 average price target backs the Strong Buy consensus rating and indicates potential upside of 26% 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 analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.