In a note issued today, following Seeing Machines unaudited H1 results, house broker Stifel maintained expectations for the full year alongside its cash forecasts. 

Stifel analyst Peter McNally noted that H126 revenue was down 7.5% compared to the prior year period due to a decline in NRE revenue as “royalties ramp into GSR”.

“Operating losses (cash/adjusted EBITDA) have reduced c.24% to a range of $13.2-13.7m with cost reductions implemented last year having a positive effect. The company has a big second half ahead but should benefit from rising high margin Royalty revenue and a further ramp in Aftermarket which is expected to exceed 6k units in the current quarter. The company reached its goal of cash flow run-rate breakeven for the month of December, and we expect profitability in Q326 and Q426 ahead of the July regulatory deadline,” McNally explained.

He added: “Cash dropped to $3.4m at period end partially due to a $5.0m inventory build in working capital and $1.0m in deferred consideration but benefits from the $14.1m accelerated payment, post period.”

Pointing out: “Despite a 46% y/y increase in H126 royalty units, the royalty units ASP has remained above $9 ($9.01) declining by only 5% y/y and over H225 which is encouraging to see as large programmes launch and ramp ahead of GSR, as we saw in the recent KPIs.” This appears to be well above its main competitor Smart Eye, which declines to release this information.

Crucially, McNally stated (before this morning’s fall in price to around 3.2p): “We think investors should make the most of the current weakness. We maintain our target price at 10.5p. Buy.”

The writer holds stock in Seeing Machines.

Seeing Machines today produced a positive update for its second quarter KPIs, for autos on the road and sales of its Guardian Gen 3 system for trucks and buses.

It underlines that the anticipated ramp up in the volume of cars and trucks with Seeing Machines interior monitoring technology, which is driven by EU legislation, is real and unstoppable. 

The second quarter is traditionally a weak one for Seeing Machines, yet there were a record number of cars produced with its driver monitoring technology, (578,363) taking the number of cars on the road with its tech to 4.8m. The company has confirmed that is expects these number to keep on accelerating in order to meet EU regulartory requirements.

Similarly, Guardian Gen 3 appear likely to hit its target of 6,000 units for the third quarter of this financial year, having achieved 3,784 units in Q2.

Of course, don’t just take my word for it. In a note out today, leading analyst Peter McNally, at house broker Stifel, commented: 

“Seeing Machines quarterly KPIs confirm that the ramp into the GSR deadline is real. Although quarterly production to December is slightly shy of Town Hall targets, growth rates have ticked up as we enter the more meaningful rollout phase into the GSR deadline in the current year. Fiscal Q2 to December was always viewed as still being quite some distance away from the deadline but clearly automotive OEM programs are ramping as are Aftermarket sales. We expect OEM production volumes to rise further in the coming quarters as we approach the July 7 GSR regulation deadline.”

Regarding Guardian sales he said: “…we are pleased to see the Dec quarter finish at 3.8k units (FQ126: 368) making the 6k+ target for FQ326 look reasonable.”

Importantly, McNally confirmed that management achieved its financial target at the end of last year. “Seeing Machines reported run-rate profitability in December and continues to expect Q3 (Jan-Mar’26) to be cash EBITDA positive, which we also expect going forward. Importantly, this expectation is without the impact of the recent $14.1minimum guarantee that was triggered due to an OEM production change. We should hear more about this at the H1 trading update on Feb 18.”

He did acknowledge that “the Magna loan remains the main risk in our view”, but stressed “we continue to believe the company has various options available to it.”

Regarding valuation, McNally’s view is: “Seeing Machines shares trade at 21x EV/Cash EBITDA (adding back capitalisation) or a free cash flow yield of 6.1% for FY26E. Post GSR deadline(July’26) we expect the shares trade on c18x PE for FY27E. Buy.

The writer holds stock in Seeing Machines.