Cepton

And now let’s turn to a tech company, Cepton. This firm designs and distributes LiDAR systems, the state-of-art, digitally based, laser ranging technology used in applications as varied as satellite mapping and self-driving automobiles. Cepton has patented its Micro Motion Technology, and delivers reliable, scalable LiDAR units capable of delivering long-range, high-resolution 3D perception.

Cepton has been at the forefront of pushing LiDAR into applications beyond autonomous vehicles. The company’s units are used in ‘smart cities,’ where they enable road, rail, pedestrian, and traffic analytics. They are also found in the industrial market, with applications in autonomous robots and ground vehicles.

The automotive sector gets the headlines, however – Cepton was, in September, selected by GM as a key LiDAR provider for the automaker’s 2023 production line.

To raise new capital for its projects, Cepton entered the public markets just last month. On February 9, the company’s proposed SPAC merger with Growth Capital Acquisition Corporation, and the CPTN ticker started trading on February 11, closing that day at $8.23. In its first few days of public trading, the stock spiked to more than $40, before dropping back down; it is now trading for less than half its first day’s close.

Cepton’s SPAC merger briefly gave the company a $1.4 billion valuation; it currently has a market cap of $613 million. The company did not raise as much capital as expected from the merger, due to a high-rate of pre-merger stock redemptions, but the transaction did give Cepton as much as $175 million in available liquidity once completed.

Craig-Hallum’s 5-star analyst Richard Shannon sees Cepton as a potential winner going forward. In his recent note on the subject, he outlines several reasons, including its versatility and its wider market.

“CPTN’s critical IP is in its unique MMT scanning method that has no moving parts and therefore is highly reliable, and a likely reason behind its GM win. While using 905nm edge emitters and APD detectors, CPTN can adapt to other scanning choices should cost/performance/reliability prove attractive over time, a capability we think few other lidar makers have… CPTN is one of a few lidar makers targeting the non-auto market, whereas dozens are going after the auto market. CPTN’s progress here (9 customers/126 engagements/$100M+ pipeline) plus what our checks indicate is industry-leading SW gives us confidence that this can provide a nice bridge to auto sales ramping in C23/24 that others don’t have.”

Shannon’s stance on Cepton is a solid Buy, and his $19 price target indicates his confidence in a strong 369% one-year upside to the stock.

This new stock holds a Moderate Buy consensus rating from Wall Street’s analysts, based on 3 reviews that include 2 Buys and a single Hold. The shares are priced at $4.05, and their $15 average target implies a 270% upside in the next 12 months.