Kodiak AI (KDK) is tracking well toward its first driver-out ride over the road before year-end, with Oppenheimer expecting more regular announcements on testing progress before that route, the brokerage said in a note Friday following a visit to the company's Dallas operations center.

The brokerage believes Kodiak's experience with off-road operations with Atlas in the Permian Basin supports efficient fleet operations and the inclusion and validation of new routes every few weeks, suggesting a transition toward materially derisked commercial over-the-road operations that should support an accelerated scale-up, according to the note.

Oppenheimer believes Kodiak's Class 8 truck performance, along with its recent drive from Dallas to Houston without intervention, supports its ability to deliver its first over-the-road driver-out route by year-end.

Management highlighted slow procurement processes, shifting requirements, and pressure from the military to make its autonomy stack smaller, according to the note.

Oppenheimer has an outperform rating on Kodiak AI.

Shares of Kodiak AI were down nearly 13% in Friday afternoon trading.

Price: 2.43, Change: -0.36, Percent Change: -12.77