Velodyne Stock Is Still a ‘Buy,’ Despite Lowered Outlook, Says Analyst
Covid-19 continues to have an impact on individual stocks, and Velodyne Lidar (VLDR) is a good example. Last Thursday, the lidar sensor maker lowered its 2020 revenue outlook, citing the pandemic as the main cause.
The company now expects FY2020 revenue of $94 million, $7 million below the original $101 million guidance. Q4 revenue is now anticipated to come in between $15.5 million to $16 million, way below consensus estimates of $27.3 million.
Velodyne believes it would have met its prior guidance had the disruption not occurred. Although the company believes it can meet its delivery targets in Q1, it has refrained from providing 2021 guidance due to the cloudy macro environment.
Although Velodyne has put in place meticulous health and safety protocols, a COVID-19 case was confirmed in its San Jose factory which forced a temporarily halt to two of its production lines. More cases were later confirmed, causing further manufacturing disruptions. As a result, the facility couldn't meet its original manufacturing targets, which has led to push outs on customer orders.
Management has expressed confidence that those orders will go ahead in 1Q. However, Needham analyst Rajvindra Gill believes the “impact of customer uncertainty throughout the year due to COVID-19, will be "harder to quantify."
Therefore, the 5-star analyst lowered his 2021 revenue estimate from $150 million to $115 million and reduced the 2022 forecast from $240 million to $220 million to “capture this potential risk.”
Nevertheless, although Gill expects a period of relative quiet for the stock after December’s strong share gains (up 43%), the dampened sales forecasts have not changed his overall outlook.
“On a positive note, the company increased its signed and awarded contracts to 25 and expanded its pipeline to 183 projects for end-markets from 175 since the end of Q3-20,“ the analyst noted. “While we expect the stock to ‘take a breather’ given the recent rise, we remain bullish on our long-term thesis of LiDAR adoption and Velodyne's competitive positioning.”
Overall, Gill rates VLDR shares a Buy along with a $29 price target. The implication for investors? Upside of ~24%. (To watch Gill’s track record, click here)
Gill’s confidence is seconded by his colleagues. Buy ratings only – 6, in fact – mean the analyst consensus rates VLDR a Strong Buy. The $28.20 average price target is just below Gill’s and suggests upside of 18% in the year ahead. (See VLDR stock analysis on TipRanks)
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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.
