Earlier this month, Samsara Inc (NYSE:IOT) reported higher-than-expected earnings for its fiscal first-quarter.

The company has emerged as a leader in AI dash cam and software for real-time driver coaching and is disrupting the vehicle telematics industry, according to BofA Securities.

The Samsara Analyst: Matt Bullock initiated coverage of Samsara with a Buy rating and price target of $37.

The Samsara Thesis: The AI dash cam and software market is likely to double in three years, Bullock said in the initiation note.

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The vehicle telematics industry, in which the company is capturing a market share of around 1% in North America annually "with its easy to use and feature-rich solution," is valued at over $19 billion, the analyst stated. Each of Samsara's fleet-focused offerings generates over $450 million in annual recurring revenues, he added.

"Telematics (software using GPS & sensors to monitor location/fuel use/idling for greater efficiency) is littered with clunky legacy products – and we are in the early stages of a widespread replacement cycle," Bullock wrote.

A lower-than-expected beat-and-raise quarter has exerted pressure on the stock, "but we view shares as oversold given little change to our LT growth thesis post-print," the analyst said. "We are 2%/4% above consensus for FY25/FY26 revenues," he added.

IOT Price Action: Shares of Samsara were down 0.84% to $29.39 at the time of publication on Thursday.

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Image created using artificial intelligence via Midjourney.