Buy Mobileye Stock, Analysts Say. Its Self-Driving Products Are Unrivaled. — Barrons.com
Apr 12, 202411:56 EDT
By Emily Dattilo
Mobileye Global's autonomous driving technology is unmatched, and investors are missing out, Wolfe Research said in a note upgrading the stock Friday.
Analysts led by Shreyas Patil upgraded shares of the autonomous-driving systems company to Outperform from Peer Perform and established a target for the price of $41 in a research report Friday. The stock has fallen 28% so far this year to trade around $31.
To put it simply, the analysts don't see any self-driving competition that comes close to what Mobileye is bringing to the market, across a number of metrics.
"At this point we do not see a clear rival that can match Mobileye's capabilities in cost, performance, or scalability," they wrote.
That will become more apparent over the next six to 12 months as more car equipment manufacturers sign up to use the system, the analysts added. Mobileye's "hands-free/eyes-on" SuperVision system is similar to Tesla's full self-driving offering, and its "hands-off/eyes-off" system, Chauffeur, will launch in late 2025.
The Wolfe team had downgraded the stock to the equivalent of neutral back in January. At the time, the analysts said inventory challenges put 2024 earnings estimates at risk, and they warned Wall Street might have to lower their volume estimates for SuperVision-based vehicles in 2026, because the company's original forecast of 1.2 million seemed tough to meet.
The Wolfe team sees a much different story now. The company's inventory issues are settling, and Wall Street per-share earnings estimates for 2024 and 2026 have declined, making them more achievable, the Wolfe team said.
Despite the better outlook, however, Mobileye shares have slumped this year, and there is still a high percentage of bearish bets on the stock.
"We don't believe that the Street fully appreciates the strength of Mobileye's competitive position," the analysts wrote.
About 24% of Mobileye stock available for trading is sold short, compared with an average of 2.5% for a stock in the S&P 500. In a short sale, investors borrow stock they don't own and then sell it, in a bet that the stock will decline so they can buy it back later at a lower price.
In January, the company said it expects a 50% drop in revenue in the first quarter thanks to excess inventory of its computer chips. Investors won't have to wait long to see — first-quarter results are scheduled for April 25.
In late morning trading Friday, Mobileye shares were down 0.2% to $31.36, while the S&P 500 slid 1.1%
Write to Emily Dattilo at
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