After Seeing Machines Ltd said first-half revenue is expected to fall 7.5% year on year, broker Stifel said the decline in non-recurring engineering income “doesn't make good headlines” but signals that the “harvest season has arrived”.
Stifel reiterated its 10.5p target price and said investors should “make the most of the current weakness”.
The fall in revenue is due to services work easing and Aftermarket Guardian sales continuing to ramp, with Magna exclusivity having ended in mid-2025.
The arrival of 'harvest season' mirrors low services revenue at rival Smart Eye, Stifel said.
Despite the weaker top line Seeing Machines also forecast positive adjusted EBITDA for the second half of its financial year and flagged that production volumes are due to “increase materially” in the coming quarters.
Stifel maintained its full-year expectations and changed its reporting approach to exclude minimum guarantees, which it said gives “better clarity of underlying performance”.
Operating losses in the first half are expected to narrow by about 24% to $13.2-13.7 million after cost cuts implemented last year.
Stifel said the company faces “a big second half” and should benefit from rising high-margin royalty revenue and further Aftermarket growth, with unit sales expected to exceed 6,000 in the current quarter.
The broker noted that the group reached cash flow run-rate breakeven in December and forecast profitability in the third and fourth quarters of the 2026 financial year, ahead of July’s regulatory deadline.
Cash fell to $3.4 million, partly due to a $5.0 million inventory build, although this was offset by a $14.1 million accelerated payment received after the period.