With the rapid increase in electrification and connectivity, the automotive industry is presently facing major changes. One of the technologies the auto industry is focusing on is autonomy.  An autonomous vehicle is capable of operating without human involvement.  This is able to be achieved by the development and modernization of such advanced technologies as radar, sonar, LIDAR, odometry, GPS, and other inertial estimation units. 

According to Facts & Factors, the global autonomous cars market is expected to reach $64.88 billion by 2026, growing at a CAGR of 22.7%. Consequently, the early entrants to this industry should benefit. 

With this in mind, today I’ll analyze three promising autonomous vehicle stocks: Aptiv PLC (APTV), Luminar Technologies, Inc. (LAZR), and Innoviz Technologies Ltd. (INVZ).  I believe these stocks should be added to your 2022 watchlist.

Aptiv PLC (APTV)

Founded in 2011, APTV engages in the development and selling of vehicle components worldwide. The company operates across two business segments: Signal & Power Solutions and Advanced Safety & User Experience. 

Year-to-Date (YTD), shares of Aptiv PLC are up 25%.

Recent Developments 

On December 2nd, Wolfe Research added the company to its auto supplier breakout list. Analyst Rod Lache believes that auto supplier stocks can outperform the broader market in 2022. The firm said that auto suppliers are poised to benefit from higher industry production and commodity tailwinds. 

Financial Overview & Analysts’ Estimates 

Aptiv's net sales for its fiscal third quarter, ended September 30th, 2021, have slightly decreased by 0.5% YoY to $3.65 billion. However, the company topped the Wall Street consensus by $120 million. Also, APTV reported a Non-GAAP EPS of $0.38, beating Wall Street estimates by $0.06. 

Analysts expect that the company will continue to improve its operating metrics in the current year. The company’s EPS is projected to rise 32.46% year-over-year to $2.57. Following the same trend, its sales should advance 17.25% to $15.32 billion in FY2021. 

When it comes to valuation, the company’s FWD P/E of 63.29x and FWD EV/EBITDA of 22.78x look overvalued compared to the sector’s median. However, I think the growth rates could justify this premium.

Analysts have rated APTV as a "Strong Buy", setting an average price target of $195.36. 

Luminar Technologies, Inc. (LAZR)

Luminar Technologies develops and sells lidar sensors and other software solutions related to autonomous vehicles. It also provides designing, testing, and consulting services for government agencies and defense contractors. 

YTD, shares of Luminar Technologies are down 50%.

Recent Developments 

On December 23rd, the company announced the execution of its upsized offering of 1.25% convertible senior notes, maturing in 2026. The gross proceeds are estimated to be $625 million. The company plans to use over $300 million for the share buyback program.  

Financial Overview & Analysts’ Estimates 

In terms of financials, although Luminar missed Wall Street expectations by $0.92 million, its revenues increased by 89.1% year-over-year to $7.98 million in the third quarter of 2021. The company reported Non-GAAP EPS of ($0.10), in line with analysts’ consensus. The company also released its FY2021 guidance, aiming to generate revenue in the range between $30 and $33 million. 

For the fourth quarter, analysts expect LAZR's EPS to increase to ($0.11) compared to its year-ago figure of ($2.72). Its revenues should lift 376.60% in Q4 to $11.59 million.

Bullish Option Bets

The options, which expire on December 31st, 2021, saw increased call buying on Monday. The open interest for the $19.00 calls rose by 5,400 contracts to a total of 5,532 open contracts (source: barchart.com). A buyer of those calls would need the stock to rise to $19.16 by the expiration date, a gain of about 12% from LAZR stock’s current price.

Analysts have established a "Strong Buy" rating for LAZR, with an average price target of $30.00.

Innoviz Technologies Ltd. (INVZ)

Innoviz is an Israel-based company that develops solid-state LiDAR sensor and perception software, supporting the mass production of autonomous cars. 

Shares of Innoviz have dropped 58% in 2021.

Recent Developments 

On November 9th, the company’s share price soared by over 18% after announcing a deal with NVIDIA. The company’s product will be used in Nvidia’s Drive Hyperion autonomous driving platform. INVZ’s Chief Business Officer said, “Our participation as an ecosystem partner marks another major step in our mission to integrate LiDAR with the most prominent software and driving infrastructure in the world.”

Financial Overview & Analysts’ Estimates 

On November 10th, Innoviz Technologies issued an earnings report for the third quarter of 2021. The company reported revenue growth by 13.6% year-over-year to $2.1 million, beating Wall Street revenue estimates by $0.1 million. Its net loss also increased 68.9% YoY to $26.43 million in Q3, leading to lower-than-expected Non-GAAP EPS of ($0.20). 

In addition, INVZ improved its liquidity position, increasing its cash on hand and short-term deposits from $49.95 million as of December 31st, 2020, to a total of $324.57 million as of 3Q2021. 

For the fourth quarter, analysts expect Innoviz's EPS to stand at ($0.19). Its revenue for the next quarter is estimated to be $3 million.

In terms of valuation, the company’s FWD EV/Sales multiple of 72.87x currently trades 1,595.36% higher than the sector’s median. However, its FWD P/B multiple of 0.95x looks discounted compared to the sector’s median of 6.06x. 

Analysts have set a “Strong Buy” rating for INVZ, with an average price target of $10.00.

APTV shares were trading at $163.28 per share on Wednesday afternoon, up $0.65 (+0.40%). Year-to-date, APTV has gained 25.32%, versus a 29.11% rise in the benchmark S&P 500 index during the same period.

Oleksandr Pylypenko has more than 5 years of experience as an investment analyst and financial journalist. He has previously been a contributing writer for Seeking Alpha, Talks Market, and Market Realist.

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