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Wolfe Research starts Mobileye at Peerperform on market shift

EditorAhmed Abdulazez Abdulkadir
Published 09/05/2024, 07:11 AM
MBLY
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Thursday - Wolfe Research has assumed coverage on Mobileye N.V. (NASDAQ:MBLY), a company specializing in advanced driver assistance systems (ADAS) and autonomous driving technologies, with a Peerperform rating. The firm's assessment reflects a shift in market perception regarding Mobileye's position in the industry.

The research indicates that approximately 18 months ago, Mobileye was widely regarded as a market share leader in ADAS and a key player in the development of autonomous driving capabilities. However, the company is now perceived as losing ground in base ADAS, with fewer opportunities in the emerging market for Surround ADAS systems, which have significantly lower average selling prices (ASPs) ranging from $200 to $500.

The analyst's comments highlight the ongoing debate about Mobileye's strategy for achieving full autonomy, especially when compared to end-to-end AI architectures being adopted by several original equipment manufacturers (OEMs) such as Tesla (NASDAQ:TSLA), NIO, Xpeng (NYSE:XPEV), and Li Auto (NASDAQ:LI). The concerns around Mobileye's approach and management's communication on the subject were noted as areas that are unlikely to see improvement in the near future.

The report reflects the evolving competitive landscape in the ADAS and autonomous driving markets, where technology and market positioning are critical for success. Mobileye's transition from a market share leader to a company facing challenges in maintaining its position is a significant development in the sector.

Wolfe Research's new rating suggests a neutral stance on Mobileye's stock, signaling to investors that the company's performance may align with market or sector averages. The Peerperform rating is indicative of the analyst's view that the company's stock will perform in line with its peers.

In other recent news, Mobileye, a key player in the autonomous driving industry, has been the subject of revised share targets by both RBC Capital and Citi. RBC Capital reduced its price target from $34 to $24, while maintaining an Outperform rating, citing potential in the company's future, particularly with expected SuperVision wins in the second half of 2024.

Simultaneously, Citi revised its price target from $53.00 to $32.00, maintaining a Buy rating on the stock, and noted that setbacks in China do not fundamentally alter Mobileye's long-term growth story.

These recent developments follow the company's robust Q2 growth, where it reported an 84% revenue increase, reaching $439 million. This surge was supported by an increase in EyeQ volumes and a rise in SuperVision volumes. Despite challenges in China, Mobileye remains optimistic about its long-term prospects in the region, particularly through collaborations with Zeekr on next-generation vehicles.

In the face of these challenges, Mobileye continues to advance its EyeQ6 platform and Brain6 technology, anticipating major design wins in SuperVision and Chauffeur by the end of 2024. The company is also preparing for significant SuperVision and Chauffeur wins in the second half of this year.

InvestingPro Insights

As Mobileye N.V. (NASDAQ:MBLY) navigates a shifting landscape in the ADAS and autonomous driving technology sector, recent data and analysis from InvestingPro provide additional context for investors. With a current market capitalization of approximately $11.05 billion, Mobileye is a significant player in the industry despite recent challenges. Notably, the company holds more cash than debt on its balance sheet, which could provide a buffer against market volatility and investment in innovation.

InvestingPro Tips suggest that while Mobileye's net income is expected to grow this year, analysts are cautious, having revised their earnings downwards for the upcoming period. This mixed outlook is reflected in the stock trading near its 52-week low, with a price that has significantly fallen over the last year. However, the company's liquid assets exceed its short-term obligations, indicating a degree of financial resilience.

On the valuation front, Mobileye has a negative P/E ratio of -53.84, highlighting its lack of profitability over the last twelve months. The adjusted P/E ratio for the last twelve months as of Q2 2024 is slightly better at -49.31, but still indicates that the company is not generating net income relative to its share price. Despite this, the PEG ratio of 0.6 suggests that Mobileye's earnings growth potential may be undervalued relative to its peers, assuming the company can achieve the expected growth.

For investors seeking more in-depth analysis, there are over 13 additional InvestingPro Tips available, providing a comprehensive view of Mobileye's financial health and market position. Interested readers can explore these tips to gain a clearer understanding of the company's prospects and make more informed investment decisions.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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