Luminar Technologies, Inc.

LAZR Details

Luminar Technologies, Inc. (NASDAQ: LAZR) is an autonomous vehicle sensor and software firm focused on providing lidar-based hardware and software products that meet the automotive industry's safety and economic requirements. LAZR has quickly attracted over 50 industry partners, including a vast majority of the world's top automotive original equipment manufacturers (OEMs). It signed the industry's first production deal for self-driving consumer vehicles with Volvo Cars in FY20. In addition, SAIC, Daimler Truck AG, Intel's Mobileye, Pony.ai, and Airbus UpNext are its new customers.

Acquisition of OptoGration: LAZR announced on July 19, 2021, that it is acquiring OptoGration Inc., a chip design partner and manufacturer, to bring its core IP and secure the supply chain as LAZR scales its Iris Lidar sensor into series production with its OEM customers. The company is merging the newest technology from OptoGration and Black Forest Engineering (BFE), which it purchased in FY17, to power its new fifth-generation lidar chip in the Iris sensor.

Standardizing Luminar Sensors on Next-Gen Electric Volvo Vehicles: On June 24, 2021, LAZR announced that its cutting-edge Iris lidar sensor and Sentinel perception software would be standard on the forthcoming Volvo's fully electric flagship vehicle, allowing the automaker to save even more lives while setting a new safety benchmark.

6MFY21 Results: The company reported a 59.29% rise in total revenues to USD 11.62 million during 6MFY21 (ended June 30, 2021) compared to USD 7.30 million during 6MFY20. However, LAZR witnessed a significant increase in net losses to USD 112.75 million during 6MFY21 vs. USD 41.02 million during 6MFY20, resulting from the high cost of sales and increase in research and development (R&D) expenses. As of June 30, 2021, its cash and cash equivalents (including marketable securities) were USD 580.44 million, and total debt amounted to USD 0.26 million.

Key Risks: As of FY20, LAZR's top client accounted for 86% of the company's accounts receivable, while the corresponding figures for the top three customers as of FY19 were 31%, 15%, and 11%, respectively. Further, each share of LAZR's Class B common stock has ten votes, whereas each share of its Class A common stock has one vote. Mr. Austin Russell (Founder, President & CEO) owns all the outstanding Class B shares, representing approximately 82.8% of the voting power as of FY20. This concentration of voting power constrains the ability of other shareholders to influence corporate matters.

Outlook: With significant commercial wins, revenue, and forward-looking order book growth due to outstanding year-to-date execution and growing OEM adoption of Luminar products, LAZR expects sales to be in the range of USD 30 to 33 million in FY21.

LAZR Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: LAZR's stock price fell 55.58% in the past six months and is currently trading in the lower-band of the 52-week range of USD 9.95 to USD 47.80. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 33.06. Considering the company's recent customer wins, growth potential, re-iterated revenue guidance, and associated risks, we recommend a "Speculative Buy" rating on the stock at the current price of USD 16.76, down 3.68% as of August 13, 2021, 1:41 PM ET.

*All forecasted figures and Industry Information have been taken from REFINITIV.

*The reference data in this report has been partly sourced from REFINITIV.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached. 

EverQuote, Inc.

EVER Details

EverQuote, Inc. (NASDAQ: EVER) operates an online marketplace for insurance shopping in the US. EVER connects customers to a network of insurance providers to receive a relevant quotation for auto, home, and life insurance products. The company earns its revenue by selling consumer referrals to insurance carriers and agents and indirect distributors. It earns most of its revenue from Direct channels.  As of August 13, 2021, the company's market capitalization stood at USD 619.91 million.

Strategic Acquisition: On July 20, 2021, EVER signed an agreement to acquire PolicyFuel and its subsidiaries for ~USD 16 million in cash, plus certain contingent stock consideration payable over three years. PolicyFuel offers policy-sales-as-a-service (PSaaS) services to its carrier clients in the property and casualty (P&C) insurance segments. This acquisition enables EVER to broaden its product offering to support the growth of its P&C carrier partners, amplify the scale of customized shopping experience for its customers, and enhance its potential to tap the USD 135 billion commission TAM component of the insurance distribution spends shifting online.

Q2FY21 Results: The company reported YoY growth of 34.18% in total revenues to USD 105.06 million in Q2FY21 (ended June 30, 2021) compared to USD 78.30 million in Q2FY20. Automotive segment, which represented 82.20% of the total revenue in Q2FY21, improved by 33.69% YoY, whereas the Other segment reported YoY growth of 36.45%. Net loss for the company reduced to USD 1.88 million in Q2FY21 vs. USD 2.81 million in Q2FY20. As of June 30, 2021, the company had a cash balance of USD 54.52 million and no outstanding debt.

Robust Track Record of Topline Growth (Source: Investor Presentation, August 2021)

Key Risks: EVER's top customer, Progressive Casualty Insurance Company, accounted for 19% of its revenue in H1FY21. Hence, any downturn in demand or loss of this customer could impair the financials of the company. In addition, the majority of EVER's insurance agencies are affiliated with a limited number of insurance carriers. Therefore, any cancellation or alteration of a contractual relationship with these insurance carriers could negatively impact the company's business.

Outlook: As of Q2FY21, EVER expects its Q3FY21 revenue to range between USD 109 - 111 million, thus realizing YoY growth of 22% at the mid-point. Adjusted EBITDA is expected to range between USD 4.5 - 5.5 million. For FY21, the company anticipates its revenues to be in the range of USD 440 - 446 million, representing a 28% YoY increase at the mid-level, and adjusted EBITDA is estimated to be around USD 23 - 26 million.

Valuation Methodology: Price/Cash Flow Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

EVER Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: EVER's stock price decreased 27.39% in the past three months and is currently leaning towards the lower band of its 52-week range of USD 21.26 to USD 54.96. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 20.81. We have valued the stock using the Price/Cash Flow-based relative valuation methodology and arrived at a target price of USD 27.05. Considering the company's growth prospects, strong track record, robust balance sheet, and associated risks, we recommend a "Speculative Buy" rating on the stock at the closing price of USD 21.53, up 0.99% as of August 13, 2021.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

* Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

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