INVZ: Design Wins Will Drive Future Upside in Autonomous Tech Demand

Key Takeaways

• Expanding partnerships and entry into new markets are driving revenue growth, margin improvement, and increased financial stability for Innoviz.
  
• Regulatory momentum and scaling production capabilities support broader adoption and long-term earnings growth through better cost management and market diversification.
  
• Heavy reliance on uncertain development contracts, volatile margins, rising competition, and persistent cash burn threaten revenue stability, profitability, and long-term investor value.

Catalysts

Manufactures and sells automotive grade LiDAR sensors and perception software to enable safe autonomous driving at a mass scale.

• Accelerating adoption and deployment of autonomous vehicles and robotaxi fleets-highlighted by Innoviz's agreements with top-5 global automotive OEMs and key players like Mobileye and Volkswagen-are expected to grow demand for Innoviz's LiDAR solutions, which supports material increases in future revenue and improved revenue visibility.
  
• Expansion into nonautomotive markets, such as smart infrastructure, security, robotics, and traffic management, is driving incremental growth, with recently launched products like InnovizSMART already gaining early traction and commanding higher ASPs and margins, thereby improving long-term gross margins and revenue diversification.
  
• Proliferation of regulatory and safety-driven requirements for advanced sensing (including LiDAR as a standard fit in certain vehicle lines) is enhancing the likelihood of mandatory adoption, which should underpin Innoviz's future addressable market and contribute to long-term revenue and earnings growth.
  
• Ramping of high-volume manufacturing capacity (including the new Fabrinet production line) positions Innoviz to benefit from cost reductions and scale efficiencies, supporting gross margin improvement and setting the stage for margin expansion as volumes rise.
  
• Growth in multi-year NRE (Non-Recurring Engineering) payments and supply agreements with multiple OEMs enhances financial flexibility, reduces customer concentration risk, and creates more predictable cash flows-all of which support sustainable earnings growth and lower cash burn as Innoviz scales.

Innoviz Technologies Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Innoviz Technologies's revenue will grow by 127.8% annually over the next 3 years.
• Analysts are not forecasting that Innoviz Technologies will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Innoviz Technologies's profit margin will increase from -197.9% to the average US Electronic industry of 9.0% in 3 years.
• If Innoviz Technologies's profit margin were to converge on the industry average, you could expect earnings to reach $40.3 million (and earnings per share of $0.16) by about September 2028, up from $-74.6 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 24.1x on those 2028 earnings, up from -4.1x today. This future PE is greater than the current PE for the US Electronic industry at 23.1x.
• Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 10.58%, as per the Simply Wall St company report.

Innoviz Technologies Future Earnings Per Share Growth

Risks

• A significant portion of current and projected revenues is tied to NRE (non-recurring engineering) payments associated with specific customer development milestones; any delays, non-conversion of statements of work into definitive production contracts, or changes in customer schedules could create lumpiness, unpredictability, or outright declines in revenue, directly impacting cash flow and long-term revenue growth.
  
• Despite ramping production and signing SOWs with top OEMs, the company does not yet have firm, finalized series production awards for these large automotive programs-future revenues remain highly contingent on these development programs converting to mass production with standard fit rather than optional fit, posing customer concentration risks and revenue visibility issues.
  
• Gross margins are highly variable and currently rely heavily on NRE contribution, with management warning of continued margin fluctuation as the product mix and production timing shift; if production volumes do not reach scale quickly, or if average selling prices for LiDAR units decrease due to competitive pressures, net margins and long-term earnings could suffer.
  
• The industry trend toward increased competition and potential commoditization of LiDAR-combined with accelerating advancements in alternative sensor technologies (like camera/radar fusion and AI-powered vision systems)-could erode pricing power, threaten product differentiation, and reduce the long-term relevance of Innoviz's hardware, negatively impacting future revenues and margins.
  
• Persistent high R&D and manufacturing costs, combined with the need to utilize equity offerings (such as the $75 million ATM program) to buffer cash burn and manage liquidity, indicate that Innoviz may not reach sustained profitability without continuous access to external capital-exposing shareholders to potential dilution and risking long-term earnings stability if capital markets tighten.

Valuation

• The analysts have a consensus price target of $2.933 for Innoviz Technologies based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $4.0, and the most bearish reporting a price target of just $1.5.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $445.7 million, earnings will come to $40.3 million, and it would be trading on a PE ratio of 24.1x, assuming you use a discount rate of 10.6%.
• Given the current share price of $1.52, the analyst price target of $2.93 is 48.2% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.