On Thursday, Goldman Sachs (NYSE:GS) revised its stance on Innoviz Technologies (NASDAQ: INVZ), downgrading the stock from Buy to Neutral and lowering the price target to $1.00 from the previous $2.25.
The adjustment reflects the firm's anticipation of a challenging environment for the lidar industry, which is expected to impact the company's revenue and earnings per share (EPS) growth.
The downgrade comes amid expectations of a slower-than-anticipated adoption of higher levels of vehicle autonomy that incorporate lidar sensors. Goldman Sachs pointed out that revenue growth is likely to be more subdued compared to the consensus estimates from FactSet.
The firm cited several factors for this outlook, including the gradual pace of rollout for vehicles with Level 3 and Level 4 autonomy, which are the primary users of lidar technology.
Furthermore, the report noted that original equipment manufacturers (OEMs) are tending to avoid lidar technology for Level 2 and Level 2+ vehicles, opting instead for alternatives like cameras and radar. This trend is expected to limit the potential for lidar integration in the near to medium term.
The analyst also highlighted the issue of ongoing price declines for lidar sensors, known as average selling price (ASP) declines, which could further constrain revenue growth for companies like Innoviz Technologies. This factor, combined with the slower ramp-up of autonomous vehicles, presents a more conservative outlook for the lidar sector's immediate future.
In conclusion, Goldman Sachs' revised price target and stock rating for Innoviz Technologies reflect a tempered expectation for the lidar industry's growth prospects, as OEM preferences and vehicle autonomy advancements evolve.
In other recent news, Innoviz Technologies, a front-runner in LiDAR technology, reported a solid Q1 2024 performance. Revenues reached $7.1 million, outperforming the projected range of $5 million to $6 million.
The company has also managed to decrease its cash burn compared to Q1 2023, ending the quarter with a robust cash position of approximately $128 million. Furthermore, Innoviz has made significant progress in its strategic realignment and collaboration with industry giants like Volkswagen (ETR:VOWG_p), Mobileye, and NVIDIA (NASDAQ:NVDA).
These recent developments indicate the company's commitment to growth and innovation. The company anticipates Q2 2024 revenues to be in the range of $4 million to $5 million, with the full-year revenue expected to be more robust in the latter half. Innoviz has also set targets to secure two to three additional programs and $20 million to $17 million in new non-recurring engineering (NRE) bookings for 2024.
The company's LiDAR technology has demonstrated its effectiveness in harsh winter conditions, generating interest from Original Equipment Manufacturers (OEMs). Innoviz's system is adaptable and suitable for both electric vehicles and internal combustion engine platforms, further attesting to the company's innovative capabilities.
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