Why Executives and Investors Are Flocking to Luminar Technologies

On Apr. 21, Luminar Technologies (LAZR) stock soared 15 percent after the company announced it had hired a Tesla executive. The stock has lost 44 percent year-to-date but has gained 83 percent over the last year. What’s LAZR’s stock forecast, and is it a "must-buy" lidar stock?

Founded in 2012, Peter Thiel–backed Luminar manufactures advanced sensor solutions for the autonomous vehicle industry. It specializes in lidar sensors, which enable autonomous cars to detect and classify objects up to 250 meters away. Luminar went public through a reverse merger with Gores Metropoulos in Dec. 2020.

Luminar has announced it has hired Tesla's former general counsel, Alan Prescott, as its chief legal officer. Prior to Tesla, Prescott worked with Uber Technologies and Ford Motor.

Luminar stock rose15.2 percent on Apr. 21, and was up in premarket trading on Apr. 22. The stock rose 30 percent after it began trading as a public company on Dec. 3, 2020, amid widespread enthusiasm for the autonomous vehicle industry. However, the stock has plunged 55 percent since Dec. 8, 2020.

According to MarketBeat, analysts' average target price for Luminar stock is $33.75, which is 78.3 percent above its current price. Of the eight analysts tracking Luminar, five recommend “buy,” three recommend “hold,” and none recommend “sell.” Their highest target price of $40 is 111.3 percent above the stock's current price, while their lowest target of $23 is 21.5 percent above.

On Apr. 20, BofA analyst John Murphy initiated coverage on Luminar stock with a neutral rating and a price target of $23. The analyst sees promise in the company’s partnerships with leading auto companies such as Volvo and Daimler Truck.

Based on the company’s bright prospects, LAZR stock looks like a good investment. Despite Tesla’s detraction of lidar technology, many businesses developing self-driving vehicles want to use lidar sensors. Luminar expects its total addressable market to grow to $150 billion in 2030 from $5 billion in 2020.

In 2020, Luminar generated revenue of $14 million. The company expects revenue of $25 million to $30 million in 2021.

Luminar stock looks like a good buy now. At almost 60 percent below its peak, the stock offers investors exposure to the lidar industry at a bargain. The company’s EV-to-sales multiples for 2021, 2022, and 2023 are 242.3x, 180.0 x, and 50.8x, respectively. The company’s EV-to-sales multiple for 2025 is 7.5x, which looks very attractive.

Many engineers in the self-driving vehicle market believe computer vision will never be perfect, and that additional sensors will always be needed. Luminar is likely to benefit as confidence in driverless cars grows.