Seeing Machines Limited is a tech unicorn whose current share price belies this status.
That, at least, is the opinion of Cenkos, the corporate broker, which Thursday issued a ‘buy’ note and punchy price target.
It reckons the stock is worth 24.3p based on its discounted cash flow (DFC) assessment of value.
That’s a 350% premium to the current price. Crucially, the Cenkos target price equates to a £1bn valuation for the Seeing Machine, which would propel it into the unicorn category (value of £1bn or greater).
Analyst John-Marc Bunce hailed the company’s recent commercial deal with Canada’s Magna, one of the world's largest manufacturers of car parts.
The pair have teamed up to produce a driver monitoring system (DMS) embedded in the car’s rear-view mirror.
DMS technology is now seen as a requirement in most cars given its safety impact and new regulatory requirements.
Several years earlier it was seen as nothing more than a gimmick.
Seeing Machines has now become a market leader in DMS technology, Cenkos pointed out.
But this is a factor the market appears to be ignoring, the broker said.
“We believe Seeing Machines should trade on premium multiples compared to its closest comparables Smart Eye, Cipia and Mobileye, as it is the market leader in providing advanced operator monitoring solutions not just for the automotive but other industries such as aviation, the latter of which continues to be left as upside in our forecasts and valuation,” said Cenkos in a note supporting its valuation thesis.