On Wednesday, BofA Securities adjusted its stance on Luminar Technologies (NASDAQ:LAZR), a company specializing in LIDAR sensors for autonomous driving technology, moving its rating from Neutral to Underperform. The firm also revised its price target for the company's stock, lowering it significantly to $1.20 from the previous target of $3.50.
The downgrade comes as the analyst at BofA Securities highlighted concerns over delays in model launches and a downward revision in the expected volume of vehicles to adopt LIDAR technology. These factors have led to a substantial decrease in volume forecasts for Luminar Technologies.
The firm noted that these delays and lower volume expectations, combined with increased near-term costs, have shifted the timeline for the company to reach EBITDA and cash flow breakeven. Originally anticipated for 2027/2028, the new projection extends the breakeven point to 2029/2030.
The analyst also pointed out that, given the revised forecasts, Luminar may need to secure an additional $1 billion in incremental capital by 2025. With the company's current market valuation, such a capital raise is expected to result in significant dilution for existing shareholders.
The updated price objective of $1.20 is still based on an enterprise value to sales (EV/Sales) multiple of 4x on the company's estimated 2025 sales. Despite the future potential of Luminar in the autonomous driving technology market, the revised expectations and financial outlook have impacted the analyst's short-term view of the stock's performance.
InvestingPro Insights
InvestingPro data underscores the challenging financial landscape for Luminar Technologies (NASDAQ:LAZR). With a market capitalization of $810.02 million and a significant revenue growth of 71.46% in the last twelve months as of Q4 2023, the company's financial health remains precarious. The data reveals a negative Price to Earnings (P/E) ratio of -1.45, indicating that the company is not currently profitable. Additionally, the gross profit margin stands at a concerning -104.17%, reflecting costs that exceed revenues.
Two InvestingPro Tips highlight critical areas for potential investors to consider. Firstly, analysts have flagged concerns that Luminar may struggle to make interest payments on its debt, a significant risk factor for long-term sustainability. Secondly, the company is rapidly burning through cash, which could necessitate further capital raises, potentially diluting shareholder value. It is also important to note that analysts do not expect the company to be profitable within this year.
For readers looking to delve deeper into Luminar's financials and future prospects, there are over 10 additional InvestingPro Tips available at InvestingPro. To access these insights and more, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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