Velodyne: The Long-Term Opportunity Remains Intact, Says Analyst

The past three weeks have not been kind to Velodyne Lidar (VLDR). Shares of the lidar maker have retreated nearly 40%, with the stock firmly in the red year-to-date.

The company’s latest quarterly results – released last week – were a mixed bag, although investors knew what was in store following a Q4 preannouncement in early January.

While Velodyne managed a beat on the top-line with revenue of $17.8 million coming in ahead of the forecasts by $1.69 million, the figure was still 6.3% below total sales from the same period last year. Non-GAAP EPS of -$0.12 missed the estimates by a cent.

Lower pricing helped VLDR ship a record 4,237 sensor units in 4Q and the company currently has 26 multi-year agreements – one more than it had at the end of 2020.

Velodyne’s quarter was marred by COVID-19 related disruptions to its manufacturing capabilities, which the company has cited as the reason behind the lack of forward guidance. Velodyne also recently suffered two design losses; one from an AV project which is thought to have forged ahead with its own in-house solution and another from an ADAS customer, thought to have chosen an inferior production-ready sensor.

That said, the headwinds are not enough to dissuade Benchmark analyst Ruben Roy from recommending Velodyne as a “longer-term opportunity.”

While Roy expects near-term share price upside to be limited due to “ongoing COVID related disruptions as well as various customer specific dynamics,” looking ahead, the analyst sees plenty to be buoyed about.

“We think that the rapidly growing and broadly diversified list of projects in VLDR’s funnel reflects an accelerating market opportunity,” said the 5-star analyst. “While the near-term lack of visibility into the shape of revenue growth this year is frustrating, we believe that the Company’s strong project pipeline, which has grown to 194 projects from 183 at the end of December and 131 projects a year ago, illustrate a strong and growing market opportunity.”

However, the cloudy outlook results in a lowered price target; the figure drops from $32 to $25. However, following the recent weakness, the figure represents possible upside of a strong 85%. Roy’s rating stays a Buy. (To watch Roy’s track record, click here)

Roy is by no means alone in predicting a bright future for the lidar maker. In fact, all current ratings – 7, in total – recommend the stock as a Buy. VLDR’s Strong Buy consensus rating is backed by a $27 price target, implying 84% of share appreciation in the year ahead. (See VLDR stock analysis on TipRanks)

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

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.

Marty Shtrubel
Marty Shtrubel was born in the UK, raised in Israel, and then headed back to London, where he made music and pursued a career in sound recording. After a move back to Tel Aviv, he set off on a new path and now works as a financial blogger at TipRanks.