On Thursday, Cantor Fitzgerald adjusted its financial outlook for Innoviz Technologies (NASDAQ:INVZ), a maker of sensor systems for autonomous vehicles. The firm reduced the price target on the company's shares to $3.00 from the previous $4.00 while retaining an Overweight rating on the stock.
The revision reflects a more conservative estimate for Innoviz's financial performance, with a particular focus on the slower-than-expected increase in gross margins and a delay in revenue recognition. The firm has revised its fiscal year 2024 revenue forecast downward to $39.6 million from the earlier projection of $56.5 million. Additionally, the fiscal year 2025 revenue estimate has been lowered to $276 million from the previous $298 million.
Cantor Fitzgerald also adjusted its gross margin expectations for fiscal year 2024, anticipating a margin of approximately negative 10%, a decline from the former estimate of around negative 3%. This change in gross margin forecast is a significant factor in the revised price target.
The valuation method employed by Cantor Fitzgerald for Innoviz combines various financial metrics. The firm uses a weighted blended approach, which includes 2025 estimated enterprise value to revenue (EV/Revenue) and estimated enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA), each accounting for 50% of the valuation.
In the updated valuation, Cantor Fitzgerald has included a premium for Innoviz due to its contract achievements with major automotive manufacturers such as BMW (ETR:BMWG), Volkswagen (ETR:VOWG_p), and an unnamed OEM from Asia. This premium is equivalent to 1x the peer median 2025 estimated EV/Revenue multiple of 2.3x, leading to a target multiple of 3.3x. Similarly, the premium to the peer median 2025 estimated EV/EBITDA multiple of 9.9x results in a target multiple of 10.9x for Innoviz.
InvestingPro Insights
As Innoviz Technologies (NASDAQ:INVZ) navigates the complex terrain of the autonomous vehicle industry, real-time data from InvestingPro offers a closer look at the company's financial health and market performance. With a market cap of $215.59 million, Innoviz's valuation reflects the high-growth potential of the sector, despite current challenges. The company's substantial revenue growth over the last twelve months, at 411.65%, underscores its rapid expansion in the market. However, the negative gross profit margin of -33.35% aligns with Cantor Fitzgerald's concerns about the company's gross margins.
InvestingPro Tips suggest that Innoviz holds more cash than debt, providing a cushion for operational flexibility. Yet, analysts are wary of the company's cash burn rate and do not expect profitability this year. Furthermore, the company's stock has experienced a significant return over the last week, increasing by 16.07%, indicating some investor optimism in the short term.
For readers looking to delve deeper into Innoviz's financials and market prospects, InvestingPro offers additional insights. Subscribers can access a comprehensive list of over 6 InvestingPro Tips for Innoviz, which could be particularly useful for making informed investment decisions. To explore these tips, visit https://www.investing.com/pro/INVZ and consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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