An eye-catching risk/reward play on the next generation of seat belts

In this equity report, analyst Jacob Benon take a deep-dive into Smart Eye. Smart Eye is a Swedish eye tracking company and an industry leader, providing Driver Monitoring Systems (DMS) to the global automotive industry. Due to safety legislation and initiatives from the automotive industry, the number of cars produced annually with a DMS is expected to reach 40,0 million by 2025 leading to an extraordinary revenue CAGR of 56,3% between 2019-2025 for Smart Eye.

Investment highlights:

  • Legislation and safety initiatives from the automotive industry and the European Union will cause the number of cars produced with a DMS to reach 30-50 million by 2025.
  • Smart Eye has already secured a market share above 50,0% until 2025, meaning more revenue than any other competitor. Thus, creating a competitive advantage, being able to spend more on R&D to develop the next generation of DMS.
  • A long term market share of 23,3% applied to a DCF with a WACC of 12,8% in 2020 gradually decreasing to 9,4% terminal implies a price per share of 211,4 SEK and a potential upside of 100,1%.

To get the analyst’s full view, please see the report below: