The EV (electric vehicle) sector and semiconductor industry are closely correlated, as chips are an important component in EV systems.
Indie Semiconductor stands at the intersection between the two industries, providing the fast-growing autotech segment with next-gen semiconductor and software solutions. The company is soon to go public via a SPAC merger with Thunder Bridge Acquisition II (THBR).
The company remains under the radar for now, but two Street analysts have taken note and are bullish on the company’s prospects. One is Roth Capital’s Suji Desilva.
“We believe recent automotive semiconductor consolidation has created very strong market opportunity for a pure-play advanced autotech vendor such as Indie,” the 5-star analyst said. “The company is levered to advanced autotech upgrades in high growth segments such as connectivity/user experience, automotive safety and vehicle electrification, in our view.”
Indie already has a proven track record, and to-date has shipped over 100 million units to Tier-1 automotive clients around the world.
Via multiple program wins and gaining a place on 12 Tier-1 auto-approved vendor lists (AVLs), the company has reached a $20 million revenue run-rate.
Over the next 7 years, the company expects a “strategic backlog” to generate over $2 billion and Desilva believes revenue will increase at a CAGR (compound annual growth rate) of 85% over the next half decade.
Indie also expects the industry to exhibit significant growth. The company estimates the addressable market in CY20 stood at around $16 billion and believes over the next five years it will expand at a CAGR of ~20% to reach $38 billion by CY25.
Accordingly, Desilva rates THBR a Buy, and sticks to a $20 price target on the shares. Investors are looking at upside of 78% from current levels. (To watch Desilva’s track record, click here)
Another analyst singing indie’s praises is Benchmark’s Ruben Roy. The analyst believes over the next ten years, the automotive market will be “one of the key growth drivers for the semiconductor market.”
Although indie is up against much bigger global semiconductor companies, Roy believes it is well-positioned to compete.
“We believe that the combination of system-level hardware and software expertise, coupled with the proven ability to rapidly design customer specific devices has enabled the Company to establish a strong foothold in the competitive automotive markets,” the 5-star analyst opined. “With more than 100 million units shipped in a relatively short time span when compared to larger competitors, indie has demonstrated strong customer traction.”
The analyst says indie’s technology portfolio should enable “many shots on goal,” and notes that as mixed-signal semiconductor designs get increasingly challenging, indie’s core mixed-signal expertise will come into play.
Roy has a Buy rating for THBR shares backed by a $17 price target. The potential 12-month gains here come in at 52%. (To watch Roy’s track record, click here)
Currently the two analysts’ reviews are the only ones on record. Cumulatively, they add up to a Moderate Buy consensus rating, while the average price target stands at $18.5. Should the figure be met, the shares will be changing hands for ~65% premium a year from now. (See THBR stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.