On Thursday, Wells Fargo maintained its Overweight rating on Mobileye N.V. (NASDAQ:MBLY) with a steady stock price target of $35.00. The affirmation follows the announcement of Mobileye's technological adoption by 18 models across several high-end Volkswagen (ETR:VOWG_p) (VW) brands, including Audi, Bentley, Lamborghini, and Porsche.
This deal marks a significant win for Mobileye's SuperVision/Chauffeur systems, though it notably excludes VW's more mainstream brands such as VW, Seat, and Skoda.
The recent VW agreement was anticipated, as Mobileye had previously hinted at a major Western OEM partnership during its Consumer Electronics Show (CES) presentation. The deal's volumes were already factored into the company's pipeline projections for 2023. Despite the positive reception of the news, there is an underlying sentiment that investors might have expected the inclusion of VW's mainstream brands in the deal.
The four luxury brands involved in the partnership represent approximately 25% of VW's total sales, equating to around 2.1 million units in 2024, with Audi accounting for nearly 1.8 million of these. Wells Fargo's analysis suggests that, assuming a 10% adoption rate for the SuperVision technology in these vehicles, the deal could result in sales of approximately 210,000 units by 2026. This figure is compared to the firm's estimate of 625,000 SuperVision units for the same year.
The focus on the high-end brands means the majority of the models adopting Mobileye's technology will have internal combustion engine (ICE) powertrains. This distinction is important as it highlights the technology's reach across different vehicle types within the VW group's portfolio, albeit not extending to the broader, more accessible market segments.
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