JPMorgan says this company could become a leader in autonomous vehicle technology

Published Tue, Sep 20 202210:18 AM EDTUpdated Tue, Sep 20 202212:12 PM EDT

JPMorgan expects that Luminar , despite having a smaller order book than its peers now, will have the highest revenue exiting the decade. The company has differentiated itself as a supplier of light detection and ranging technology, or LiDAR, for autonomous vehicles through focusing on its software stack, JPMorgan analyst Samik Chatterjee wrote in a note to clients when initiating the stock as overweight. "Luminar will likely be the largest pure-play LiDAR supplier at the end of the decade, and the supplier with the highest margins, and the only supplier we expect not to require incremental capital to navigate a ramp," Chatterjee said Tuesday. In the wake of his report, Luminar shares are up more than 4%. The analyst set a price target of $30 by December 2023, which implies the stock will more than triple in value. Luminar shares have fallen about 61% from their 52-week high. Chatterjee said Luminar is positioned to generate the most revenue of its peers since it already has numerous relationships with automakers including Volvo , Nissan and Mercedes . He said Luminar is expected to be the "supplier of choice" in the long run due to its engagement and design. The Orlando-based company has also invested in its software stack with Zenseact, which Chatterjee sees as a differentiator that will help Luminar outgrow peers solely focused on hardware. "We believe Luminar is focused on L3+ applications and most engagements are going to be long-term in nature, with customers looking to work with the company through multiple iterations of L3+ autonomous systems in the coming years," Chatterjee said. Chatterjee forecasts Luminar will earn $7.25 per share on $6 billion in revenue by 2030. Having ended 2021 with a cash balance of about $750 million, the company is not in immediate need of additional capital, he said. Luminar went public through a SPAC in late 2020, which made the then-25-year-old chief executive one of the first and youngest people to become a billionaire within the self-driving space. It is one of many seeking to capitalize on growing interest in self-driving vehicles. Some in the industry, including Tesla 's Elon Musk, have cast doubt on LiDAR's necessity. But Chatterjee said the debate around LiDAR's inclusion has been "long settled, with decisions to exclude LiDARs largely a cost-based decision rather than performance." — CNBC's Michael Bloom contributed to this report.