Order levels indicate that auto supplier Veoneer Inc VNE has gained share in the active safety market, and its 2019 backlog growth potential appears strong, according to Longbow Research.
The Analyst
Analyst Anthony Deem upgraded Veoneer from Neutral to Buy and set a $40 price target.
The Thesis
The order intake momentum of $900 million in active safety in 2018 supports a 2020 revenue target in this market of more than $1 billion, Deem said in the Monday upgrade note.
The company's 2022 target of more than $2 billion is supported by “evidence of future share gains and strong capability in key technologies such as LiDar, software and vision,” the analyst said.
Veoneer is poised for additional backlog gains in active safety in 2019 and beyond given its growing OEM bid list, Deem said.
“As it relates to restraint control systems, we are more bullish on the market share and autonomous vehicle content per vehicle growth opportunity."
The company's risk-reward profile seems attractive, as an estimated enterprise value of $2 billion for the active safety segment for 2020 takes the enterprise value assumption for 2022 to $3.6 billion, even with a conservative active safety revenue target of $2 billion by 2022, according to Longbow.
Price Action
Veoneer shares were trading up 2.73 percent at $29.37 at the time of publication Monday.
Related Links:
Autoliv Downgraded By Wells Fargo After Veoneer Spinoff
Auto Supplier Pair Trade: Buy Lear, Sell Adient
Photo courtesy of Veoneer.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
