Tag Archives: Peter McNally

Stifel names Seeing Machines as a top pick for 2026

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Stifel analysts have named their top stock UK picks for 2026. In the tech category, Seeing Machines was named as one of its 3 top picks alongside Kainos and Concurrent Technologies.

The companies in the tech category were jointly chosen by tech analysts Peter McNally and Freddie Hindley.

Seeing Machines: Target Price 10.5p

The note explained the reasons for Seeing Machines inclusion as follows:

“As OEMs accelerate integration ahead of GSR, we expect automotive production volumes to ramp from 488k per quarter in June 2025 to c.1.6m per quarter by June 2026. This is supported by the company’s disclosure that its OEM customers are scheduled to register c.12.5m vehicles in Europe, all requiring compliant driver monitoring solutions. The company has indicated the potential to generate up to $10m of cash per quarter in H2 CY26 as royalty revenues scale, although this is not fully reflected in our forecasts. We expect FY26 revenue growth of c.30%, with gross margins of c.66%, further benefitted by a return to growth in the aftermarket division as Gen 3 volumes improve. The key risk remains refinancing the Magna loan due in October 2026, however we see a variety of funding options available, supported by improving cash generation and recent refinancing activity by peers such as Smart Eye.”

Kainos: Target Price 1225p

Of Kainos they wrote: “Following strong results in late August, we believe the company is at the start of another upgrade cycle that could extend through the year and beyond. All divisions have now returned to growth, with potential upside from software sales in the Workday Products division, supported by the recent launch of the Pay Transparency Analyzer.”

Concurrent Technologies: Target Price 250p

Regarding Concurrent Technologies they explained: “We view Concurrent Technologies as a high-quality defence-exposed technology name, supplying ruggedised computing boards and integrated systems into long-duration military programmes, with strong defence budgets supportive. Its first-to-market R&D model has already secured c.£290m of lifetime design-ins, yet only a modest proportion of this value has so far flowed through to reported revenues. FY26 is therefore a pivotal year, as a large pipeline of prior design wins is expected to begin moving into production.”

The writer holds stock in Seeing Machines.

Stifel raises Seeing Machines price target to 10.5p

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Following today’s news that Seeing Machines is to receive a lump sum royalty payment of US$14.1m from a Tier 1 auto company, house broker Stifel has raised its price target to 10.5p from 9.6p.

Stifel’s analyst Peter McNally explained : “This benefits revenue, profitability and cash in the current year by pulling forward payments that would ordinarily have been received in future years. As this is a payment for royalties, the benefit to revenue falls through directly to cash as it is 100% gross margin.

“While we had little concern for the company’s cash resources given the recent revenue trends combined with its cost reduction programme, this provides further resources and benefits our discounted cash flow valuation with nearerterm cash flows. It also is a testament to the company’s commercial foresight to negotiate minimum guarantees when its customer contracts were signed. 

“We raise estimates for the current year and slightly reduce outer years to reflect early receipt and due to the benefit of the timing of cash flows. We raise our DCF-based target price to 10.5p from 9.6p. 

“We still expect the company to have reached cash flow run-rate break even by the end of 2025 (December) and look forward to the release of the fiscal Q226 KPIs, which are likely to be released in early-to-mid February. The shares now trade on 24.0x FY26E EV/cash EBITDA or 19.8x FY27E (or PE of 20.9x). Buy”

In his note McNally forecasts revenues of US$93.7m and adjusted pre-tax profits of US$8.6m for the current financial year, ending 30th June 2026.

The writer holds stock in Seeing Machines.

Seeing Machines wins contracts worth $11.6m 

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Seeing Machines (AIM: SEE) has announced an additional $10m auto win with a European customer and a new win with a Japanese car manufacturer worth $1.6m, taking its pipeline of contracts wins to over $400m.

European win

The European win is with an OEM that already has a production in development with SEE, and this extends its agreement for production volumes beginning in 2028 through to 2031. 

According to analyst Peter McNally at house broker Stifel, this could be the first of many extensions as the life-saving technology becomes mandatory for all vehicles in Europe. McNally stated: “We think this could become a typical announcement for the company, as we believe it has a large part of the European market based on the statistic released at the FY26 results, i.e., that its OEM customers are forecast to sell circa 12.5m of the estimated circa16.0m cars in Europe in 2026.”

Japanese win

In addition, Seeing Machines has been appointed by Mitsubishi Electric Mobility Corporation (MELMB) to deliver a small program for a leading Japanese OEM, with production scheduled for 2028. In the RNS issued today, SEE stated: “This program, with an initial value of US$1.6m, reinforces Seeing Machines’ long-term growth strategy with MELMB in Japan, and the company is confident of securing additional opportunities as this progresses.”

It added: “These new business awards bring the total cumulative initial lifetime value for all Seeing Machines Automotive programs won to date, to over US$400m, the majority of which is expected to be received by 2028.”

AGM news

Separately, at the company’s AGM earlier today, CEO Paul McGlone revealed that the Mitsubishi trial of Guardian Gen 3 in trucks has been successful.

Importantly, McGlone also confirmed that Seeing Machines is on track to hit its breakeven “runrate” as of the end of December so, in effect, Q3 of this financial year should be its first cashflow positive quarter.

McNally in his note wrote that the biggest hurdle remains the Magna loan but reassured investors that “
given the DMS ramp and our expectation of positive cash flows in the back half of 2026, we think it will have financing options available to it from a variety of sources”.

Personally, I expect Magna will be more than happy to take shares in lieu of repayment as Seeing Machines price rises above 10p over the next couple of months – driven by further contract news and the confirmation that it has hit breakeven, with profitability assured. Thus, the Magna loan is effectively an issue that should not overly concern shareholders.

The writer holds stock in Seeing Machines.

Seeing Machines seals Amazon contract in the US

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Seeing Machines (AIM: SEE) has finally won the Amazon.com contract for Guardian Gen 3, which should be the first of many decent-size Gen 3 contracts over the next few months. 

In an RNS issued today Seeing Machines confirmed that it has won the “US-based multinational” and would support the initial installation of 1,100 Guardian units, which are scheduled for completion by this December. Discussions are also ongoing for further expansion in the New Year for Amazon’s heavy truck fleet.

According to information I’ve obtained (which are likely to be an underestimate), Amazon in the US has a fleet of approximately 1,645 tractors (cabs) and 12,835 trucks. 

KPIs

Seeing Machines also released its latest set of KPIs for Q1 FY 2026, with confirmation that it now has 4.24m cars on the road with its DMS technology. An additional 510,000 cars were produced in the latest quarter, 4% up on the previous quarter, demonstrating continued growth in what is traditionally a subdued quarter.

Sales of Guardian Gen 3, at 368, did disappoint. However this was due to delayed large deals, which are now coming through as is clear from the Amazon win.

In a note issued today, analyst Peter McNally from house broker Stifel commented: “Guardian unit sales in the quarter were 368 (fiscal Q425: 2,536) as certain expected deals slipped into the current quarter, including a significant aftermarket order announced today for the 1.1k units before December 2025. This means that shipments in Q2 so far are already greater than 2,600 units and therefore have been more of an issue of timing rather than quantity, as we are less than halfway through fiscal Q2.”

He added: “The aftermarket pipeline remains healthy, with multiple pilots and commercial contracts progressing, and partnerships such as Mitsubishi Electric Automotive America expected to support production scaling through FY26. We estimate current quarterly capacity at roughly 6k units with c.$800 ASP and ~40% gross margin, highlighting improved unit economics versus Gen-2 and stronger leverage potential as volumes rebuild.”

Importantly, CEO Paul McGlone has confirmed: “We remain on track to achieve our cashflow break-even run rate target by the end of this calendar year.” 

While some traders have cashed out their winnings, most investors are holding as the share price rise seems set to continue, as auto volumes ramp in anticipation of EU legislation that comes into force in July 2026. Also, tougher Euro NCAP safety ratings apply from January 2026 and will necessitate a camera-based DMS/OMS for a car to achieve a 5 star safety rating.

McNally’s view is clear: “We expect momentum to build through FY26 as full compliance with the July 2026 GSR mandate approaches. Seeing Machines remains the DMS market leader with over 4.2m vehicles deployed, ahead of Smart Eye (~2m). With customers representing c.12.5m of the 16.1m European vehicles forecast to be sold in Europe in 2026, the installed base should continue compounding, though the pace of inflection will vary by OEM depending on inventory and model cycles.”

In addition, I expect multiple new contract wins in auto and aftermarket to materialise by Christmas.

The writer holds stock in Seeing Machines.

Stifel reiterates ‘Buy’ with 9.6p price target

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Following on from the news that VW has started production in China, with Seeing Machines DMS and OMS tech in Magna’s rearview mirror, Stifel has reiterated its 9.6p price target and confirms SEE as one of its top picks.

In a flash note issued today, Stifel analyst Peter McNally wrote:

“The significance to us is that production is happening on time. As we heard at the Townhall event earlier this year, Seeing Machines was expecting the start of production of a number of programmes this year with one significant one over the summer (which we believe happened on time) and a second larger one later in the year. So, the announcement is good news that it is starting toward the early part of calendar Q4.

“We also note that this is for both DMS and OMS which typically indicates better ASP than DMS alone. We see this as a positive development as the company approaches its target of run-rate cash flow break-even by the end of the year.

“We don’t think this announcement has anything to do with the Magna loan but is purely signaling that the production ramp is starting on time. We should be getting fiscal Q2 KPIs in the next couple of weeks. The company remains one of our top picks at 14.4x FY26E EV/EBITDA. Buy.”

It should be remembered that current broker estimates don’t include estimates for revenue from sales in China, so I’m expecting broker upgrades in due course.

The writer holds stock in Seeing Machines.

Seeing Machines focused on cashflow breakeven in CY 2025

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It’s clear from the latest spate of redundancies that Seeing Machines management is laser focused on achieving breakeven this calendar year.

In addition to cutting staff numbers by 77 in CY2024, the recently announced strategic reorganisation was accompanied by another wave of redundancies (70 people?) from Jan-March 2025, that is set to further cut costs, by ÂŁ12m annualised. 

According to a note issued on 27th March by analyst Peter McNally at house broker Stifel: “The $12m annual cost reduction means there should be a clear path to monthly cash flow breakeven in 9 months time.”

I’m naturally sad that so much talent at Seeing Machines is being let go and am well aware that the delayed development of Guardian Gen 3 played a large part in slowing the company’s progress to cashflow breakeven. Hopefully, these talented folks will find good jobs elsewhere and may even return to Seeing Machines as the business grows.

Still, as an investor it’s my job to assess if the reason for originally investing in Seeing Machines is still valid. I’m still convinced it is and reading Peter McNally perceptive analysis is reassuring. He explains: “Seeing Machines results show the company is adapting to a more challenging environment by adjusting its internal costs with the goal of reaching cash flow breakeven in the current calendar year.”

That doesn’t mean I don’t have questions and I hope to get answers to some of those questions at this week’s investor event – the so called ‘Town Hall’. (I can’t think of a Town Hall meeting without a bit of argy bargy — but let’s try and keep it civilised).

Whatever management mistakes delayed bringing Guardian Gen 3 to market it has developed and commercialised world class technology in multiple industries, making some super deals with partners ranging from Collins Aerospace to Mitsubishi and Magna. As someone who knows I could never run a company, I do respect those who possess that ability. Let’s not forget that Seeing Machines is actually saving lives. Not many of us can say that. 

Scandalous

If I’m angry and disappointed, it’s with the car and lorry manufacturers who have delayed implementation of life saving driver monitoring tech in order to save a few dollars. A few dollars that could have been shaved off the bill of materials somewhere less critical. That’s scandalous.

However, even that delay can only be temporary thanks to Euro NCAP’s sterling work and GSR2 regulations. All those OEMs are really doing is damaging their own reputations for safety alongside sales.

Guardian Gen 3

The good news is that in his note McNally confirmed that Guardian Gen 3 is now totally ready, in production and shipping now for various trials, which should lead to much larger orders in due course. 

“The biggest news in today’s results to us is that the Gen 3 Aftermarket product is ready, tested and now in production with early shipments commenced. This is not just the GSR-ready version of Gen 3, but the full Gen 2 replacement equipped to handle over the air updates in a better form factor. This is one of the main factors in revenue and profitability growth going forward, in our view. It should also improve recurring revenue from Driver Monitoring as units go live in the field.”

I obviously want more details on maximum monthly production volumes, prices and so forth. Yet, McNally is right when he describes Guardian Gen 3 as “a significant swing factor in future revenue and profitability, especially with the Mitsubishi partnership referral agreement in place”. 

Moreover, If the Mitsubishi partnership referral agreement delivers the volume of sales of Gen 3 that I expect, breakeven in 9 months may prove overly conservative. 

The main issue I have is separate to that, and relates to the truck manufacturers installing factory fit DMS for ADDW. The EU GSR legislation absolutely demands it. Yet, so far, there is little evidence of the likes of Volvo, DAF, Mercedes-Benz etc installing it. Only in buses have I seen much evidence. I’d certainly like to know if trucking OEMs are dragging their feet on that for the same reason some auto OEMs have.

Fortunately, large enterprise customers appear to be complying and those 7 “big trials” for Guardian Gen 3 that Paul McGlone recently confirmed are clear evidence of that. A win with Amazon would be huge news that could double the share price of Seeing Machines in a day. (I’m hoping we get official confirmation by the end of April). 

Breakeven

Let me be clear. Achieving cashflow breakeven will be a game changer for Seeing Machines. I know, from previous conversations with fund managers and recent ones with City contacts, that there is a tsunami of fund manager cash keen to come into SEE once it has proven beyond any shadow of doubt that it is set to be profitable. I still believe Paul McGlone, Martin Ives, John Noble, Mike LennĂ© and the rest of the team at Seeing Machines can make that happen. 

As evidence of the appetite for investment in the company Peel Hunt has now upgraded Seeing Machines from ‘Reduce’ to ‘Buy’, because of the “upside potential” though the price target remains at 3p. (I’m also expecting Singer to soon initiate detailed coverage).

With US$39.6m in cash Peel Hunt believes SEE has “at least 12 months of runway” and I believe that is more than sufficient time for it to become profitable and the share price to take off. 

I look forward to seeing our guests from Australia this week along with my fellow investors – some of whom have grown older with me.

It’s been a hard few months for SEE and for its investors. Still, I hope the smiles will be back on our faces very soon. 

The writer holds stock in Seeing Machines.

Disappointing growth, SEE’s broker downgrades

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Following Seeing Machines’ disappointing first half Trading Update combined with quarterly KPIs, both house broker Stifel and Peel Hunt downgraded their price targets and cut revenue expectations, while increasing their estimates for the losses expected for this year. 

In terms of the KPIs: cars produced with SEE technology grew more slowly than expected, falling 34% to 267K in 2Q25 compared with the previous quarter. In addition, sales of Gen 3 Guardian were only 288, making just 1,779 units sold in the first half of the 2025 financial year.

House broker Stifel’s Analyst Peter McNally cut his Price Target from 11.4p to 9.6p but maintained his ‘Buy’ recommendation. McNally summarised his view as follows:

“Seeing Machines’ H1 performance is indicative of wider auto industry struggles, with broadly flat revenues and ARR, leading to a larger-than-expected adjusted cash EBITDA loss of $17.5-18.0m. 

However, cost initiatives over the past 12 months and further planned in H2’25 should reduce cash operating expenses significantly. We also highlight the recent $32.8m strategic investment from Mitsubishi Electric Mobility, which provides  stability as the company gets closer to reaching cash flow breakeven.

While cars on the road has been healthy with 90% y/y growth, Q2 production was down 34% q/q. Although there is a lack of certainty with regard to when exactly this volatility will reverse, we still expect a strong tailwind from the approaching GSR deadline (July 2026) as it moves closer.

Sales of Aftermarket Guardian 3 units have also faced slight delays, however we expect sales to accelerate in H2 as a result of a full commercial release and benefit from the new referral agreement with Mitsubishi Electric Automotive America, which opens the Guardian 3 up to a 1m+ vehicle fleet market.

We reset revenue estimates to a more conservative level based on market uncertainty, but do expect a reduction in the cost base by FY26E to mitigate much of this in FY26/27E. We moderate our target price to 9.6p (from 11.4p) to reflect these new forecasts.”

Explaining in more detail his changes in forecast and valuation, McNally said: 

“We reduce FY25-27E revenues by $10m, primarily as a result of softer royalties, prudently assuming that production volumes do not pick up in FY25E, with possible upside. While the FY25E adj. EBITDA loss increases by $7.5m to $24.4m, we expect the revenue reduction beyond FY25E to be largely mitigated by cost initiatives and as a result we reduce adj. EBITDA profit by just $2m in FY26/27E. As a result of our forecast changes, our DCF-based target price reduces to 9.6p (11.4p). At current levels the shares trade at 3.6x our FY25E EV/Sales, or 11.8x FY26E EV/EBITDA. Buy.”

In addition, Peel Hunt today downgraded from a ‘Buy’ to ‘Reduce’, slashing its Price Target from 7p to 3p. In its note, analysts wrote: “We cut FY25/26/27E revenue by 17%/19%/10% to reflect weaker automotive demand and the slow start from the Guardian generation 3.”

My view

Naturally, I’m disappointed by the update today. I had expected cars on the road to whizz past 3m, despite volatility in the auto market. I didn’t expect car makers to sacrifice safety in an effort to cut costs, thereby risking reputational damage by producing more dangerous cars for consumers. It is shocking that saving lives from driver fatigue and distraction is deemed a lower priority than making profits. Still, it highlights why regulation (in the form of GSR) and pressure from Euro NCAP are vitally important in forcing car manufacturers to improve car safety.

I don’t hold the management of Seeing Machines responsible for this atrocious attitude from car manufacturers, although it has clearly impacted revenues in the short term – and is likely to continue for two more quarters we’ve been advised.

Still, it shouldn’t be ignored that Seeing Machines continues to have more cars on the road with its technology than any of its rivals and I don’t expect this to change.

That is because I expect Seeing Machines to win a significant share of the RFQs that are currently underway. News of a significant contract win could ease investor concerns and encourage brokers eventually to upgrade estimates.

However, I’m far less forgiving of the time it has taken to ramp up production of Guardian Gen 3, which to be frank was late to launch and has so far sold only in small volumes. It’s no wonder many private investors have sold out. However, given CEO Paul McGlone’s statement in a video interview with Tylah Tully that there are 7 significant trials in progress – one of which I believe is Amazon – I hope that things are now on track for significant sales in the final quarter of this financial year. 

Fortunately, the company currently has a $39.6m cash balance and time to set things right before the end of this financial year.

Personally, I’m prepared to hold as I expect the share price to rebound on contract news before the end of this financial year. However, do your own research.

The writer holds stock in Seeing Machines.

Stifel flash note: SEYE KO’d by Seeing Machines?

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In a flash note published yesterday, Stifel confirmed that Smart Eye’s Q3 results clearly show it is taking at beating at the hands of the global leader Seeing Machines.

Stifel analyst Peter McNally confirmed what well researched investors already know; that the auto industry is in a tough place, particularly for Smart Eye. Regarding Smart Eye, he commented: “Automotive revenue shows a slight dip (-1.5% q/q) to SEK 32.4m and is therefore similar to last quarter, which was flattish also. Part of the reason for being flattish is a transition away from services (NRE) to licences, which grew 100% y/y to an undisclosed amount.”

For those who still think Smart Eye is a contender for the automotive crown, McNally’s killer punch is that: “On a like-for-like basis, Seeing Machines Automotive revenue (excluding Aerospace) in FY24 was well over $60m versus Smart Eye’s $11.4m (Q323- Q224), so it still looks like Seeing Machines is well ahead.”

According to McNally, two more take-aways from the results were, firstly: “Commentary on growth in Automotive licences is positive saying the growth rate should increase in Q4 and ‘even higher growth in 2025.’ Clearly this suggests that they see adoption is increasing, which is good news for the industry, but we still think they are playing catch up at this stage as their revenues are significantly lower.”

Secondly, “Smart Eye is also suggesting that volumes will pick up in Q4 in Aftermarket, which somewhat agrees with Seeing Machines’ expectation of a ramp in volumes in its fiscal H225 (Jan-Jun 2025).”

Having listened to the Smart Eye presentation, I found the reluctance of the company to state the number of cars on the road with its technology a telling indication that it has been bested in autos by Seeing Machines. Smart Eye once used to boast of having 1m cars on the road but, as Seeing Machines approaches 3m by the end of this calendar year, the Swedish company has yet to announce hitting 2m, preferring to use the opaque terms ‘design wins’ and ‘models’.

Of course, do your own research.

The writer holds stock in Seeing Machines.

Seeing Machines takes gold with new world record

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Seeing Machines has proved to the world that it is the leading company in DMS, with its latest set of KPIs taking it past the 2.2m level for cars on the road an increase of 104% year-on-year. It seems set to pass the 3m level, as predicted here a few months ago.

Guardian sales for Aftermarket were also solid: monitored connections rose 19% over the past 12 months to 62k despite the Gen 2 box approaching end of production.

Peter McNally, analyst at house broker Stifel commented: “Seeing Machines seems strategically well positioned for continued market leadership with Tier 1 automotive suppliers Valeo and Magna as partners, rising adoption, a recently homologated Gen 3 aftermarket product and a healthy balance sheet as it heads toward a monthly cash break even run-rate in FY25E.” 

Paul McGlone, CEO of Seeing Machines, said: “We have maintained growth of over 100% in the number of cars on road featuring our technology from 12 months ago, despite the quarter-on-quarter volatility experienced during the year. Regulations are now in place so we are confident that these figures will continue to grow for existing Automotive programs and as new programs start production.

“Similarly in Aftermarket, the new regulation in Europe will require more commercial vehicle OEMs to seek After Manufacture fitment for our Guardian technology, underpinned by successful homologation (regulatory approval) with our Northern Ireland customer, Wrightbus, as announced on 30 July 2024. With Guardian Generation 2 stock sold we are now focused on Guardian Generation 3, initially with European commercial vehicle OEMs, then all customers across existing markets in Europe, The Americas and Asia Pacific.”

Unassailable lead

Seeing Machines has now surpassed Smart Eye and there appears to be no way its Swedish rival can catch up in the short term.

Peter McNally, gave a useful summary of where we stand now:

“Cars on the road is proof of engineering execution: Although its competitor Smart Eye was the first to break the 1 million cars on the road threshold in June 2022, it was still “not quite 2 million” in May 2024 (Smart Eye report Q224 on Aug 21st). Seeing Machines reached 1 million in June 2023 and has been the first to announce 2 million. Seeing Machines has 7 Automotive programs currently in production and we believe most of these are still ramping given it takes roughly 18 months to reach full production. The company has a total of 17 programmes signed worth $392m with many more likely to be added in the future given increasing regulatory drivers and evidence of execution.”

Were there a DMS Olympics Seeing Machines would take gold, with Smart Eye in second place. As for Bronze, I’d hoped to award it to Cipia. However, I wonder if Cipia may be hampered by the likely fallout from Israel’s escalating Israel war in the Middle East.

The writer holds stock in Seeing Machines

Seeing Machines Gen 3 Guardian fitted into first commercial vehicle manufacturer

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Seeing Machines has confirmed that its recently launched Guardian Gen 3 AI-powered Driver Monitoring System (DMS) has been successfully fitted into Wrightbus and achieved ‘homologation’, the formal process of being approved and certified for use.

In a note issued today by house broker Stifel, its analyst Peter McNally explained that the actual contract with the Northern Irish bus manufacturer is likely to be worth ÂŁ0.8m-1.5m per year to Seeing Machines at full production.

While that’s not huge, the real significance of this news is that it paves the way for further approvals from bus and truck manufacturers. For example, Seeing Machines revealed that 3 other OEMs are currently going through the approval process, which McNally noted: “indicates that the company has won another customer since the last update”.

OEMs Future Proofing

McNally also reiterated a point that has been ignored/misunderstood by many investors; some manufacturers will increasingly seek to future-proof their commercial vehicles by installing advanced DMS, to be ready for the introduction of more stringent regulations in Europe that come into effect in 2026. 

Here’s how he explained it in his note: 

“On 7 July, two key regulatory changes to Europe’s GSR came into effect:
(1) Driver Drowsiness and Attention Warning (DDAW): DDAW, which requires driver monitoring systems for signs of drowsiness, is as of 7 July mandatory for all new road vehicles sold. While the regulation does not appear to require advanced DMS, allowing a wider scope of solutions, we would expect the change to increase demand for DMS, with Seeing Machines’ products a market- leading option for OEMs now necessitated to at least provide monitoring for drowsiness. However, this can also be provided by steering wheel torsion.

(2) Advanced Driver Distraction Warning (ADDW): A more stringent standard requiring direct or camera-based DMS to detect driver distraction, ADDW points more directly towards Seeing Machines’ offerings. As of 7 July, this is mandatory for all new ‘types’ of registered vehicles, but we shall have to wait two years before it is mandatory for all new vehicles sold. However, for customers installing DMS in the short term to meet the DDAW regulation, there is now an incentive to future- proof vehicles for when ADDW fully comes into effect in 2026, with the Guardian 3 a market-leading option.”

It’s therefore a no brainer that the more proactive, safety-conscious, OEMs are going to accelerate the process of installing advanced, camera-based DMS. With its technological lead further buttressed by leadership in gaining regulatory approval and certification for use by commercial vehicle manufacturers Seeing Machines should take a very healthy chunk of the market in Europe.

Massive market in Europe

The scale of this regulation-driven opportunity is huge as McNally conveyed with some stats: “The European Automobile Manufacturers’ Association (ACEA), which ‘unites’ Europe’s 15 major car, truck, van and bus makers, stated that European bus production rose 19% to 33k vehicles in 2023. In addition, commercial truck production rose 16% to 347k. For comparison, Seeing Machines reported a total of 14.8k hardware units sold in FY23 which produced $14.5m in revenue from hardware and installations.”

McNally reiterated his investment case for Seeing Machines with ‘BUY’ recommendation and a 13p price target. “We continue to think that Seeing Machines is leading the DMS market. At current levels, the shares trade at 4.0x FY24E EV/sales or 3.3x FY25E, which we think is attractive for a market leader in a large industry with a three-year forecast revenue CAGR of 27% or 42% for gross profit through FY26E.”

Personally, I’m expecting upgrades this financial year as Seeing Machines market leadership in Aftermarket and Auto (never mind Aviation) becomes glaringly obvious and profitability is achieved.

The writer holds stock in Seeing Machines