A Price Target Hike and New Order Flow From Volvo: Luminar (LAZR) Is Well Positioned to Upwardly Revise Its Order Book and Raise Its Medium-Term Revenue Outlook


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Luminar (NASDAQ:LAZR), a manufacturer of high-performance LiDAR sensors for autonomous vehicles, is gaining prominence among financial analysts on the basis of recent positive developments.

The CFO of Luminar, Tom Fennimore, stated in an interview with the Wall Street Journal that the company would become profitable in 2024. Moreover, Fennimore stressed that Luminar was currently pursuing a prudent strategy by conserving cash, aiming to end the current fiscal year with a greater cash balance than the one at the start of the year. Bear in mind that the LiDAR manufacturer had $485.7 million in cash and cash equivalents as of the 31st of December 2020.

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The bigger news of the week, however, turned out to be Volvo’s incorporation of LiDAR sensors provided by Luminar into its cars as a standard practice. To wit, Luminar’s Iris LiDAR sensors and Sentinel software would be integrated with Volvo’s in-house software solution in the upcoming electric XC90 SUV, slated to be built in California. The electric SUV is expected to hit the road in 2022. Bear in mind that Luminar already has a supply agreement with the autonomous vehicle startup Pony.ai.

Of course, Luminar is also investing heavily in a facility in Monterrey that is operated by the Canadian company Celestica. According to Fennimore, this facility is crucial for achieving sustainable profitability.

This brings us to the crux of the matter. Baird analyst Tristan Gerra upgraded Luminar’s rating from Neutral to Outperform today while also increasing its stock price target from $22 to $30, corresponding to an upside potential of over 25 percent, based on the current pre-market share price of $23.95. Gerra believes that Luminar is well-positioned to upwardly revise its order book and raise its medium-term revenue outlook. The analyst also believes that the ongoing move toward highway autonomy would allow the LiDAR manufacturer to benefit handsomely.

Unlike FMCW lidars, Luminar’s sensors measure the time taken for a laser beam to reflect off a surface. Luminar’s proprietary lidar architecture utilizes an InGaAs Receiver & ASIC (2x) 1550nm Laser Dual-Axis Scanner. As per the details, the company’s Iris will be seamlessly integrated into the roofline of SAIC’s R brand vehicles. Luminar’s lidar sensors provide a range performance of over 250 meters and a maximum resolution of over 300 pts/deg2 @ 10Hz. Moreover, it also offers a 120°x30° field of view.

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