Mobileye stock price target increased, maintains neutral on partnership

On Monday, Mizuho (NYSE:MFG) Securities adjusted its outlook on Mobileye N.V. (NASDAQ:MBLY) shares, a leader in advanced driver-assistance systems (ADAS), by increasing the price target to $15.00, up from the previous $13.00. The firm continues to hold a Neutral stance on the stock.

The revision comes as Mobileye prepares for its Capital Markets Day on December 9, 2024, where updates on its autonomous vehicle (AV) roadmap are expected, potentially including details on its Supervision, Chauffeur, and DRIVE offerings.

The analyst from Mizuho highlighted several key drivers behind the decision to raise the price target. Among them is Mobileye's partnership with Lyft (NASDAQ:LYFT), which is seen as a positive step for the long-term adoption of Autonomous Mobility-as-a-Service (AMaaS).

Moreover, the ADAS market is expected to grow steadily, with a projected compound annual growth rate (CAGR) of 22% for units from 2023 to 2028. However, the commercialization of Level 4 and Level 5 autonomous vehicles is anticipated to be a gradual process extending into the 2030s.

Despite the positive growth outlook for ADAS technology, Mizuho remains cautious about the global automotive market's growth prospects for 2025, citing potential tariff risks from the current U.S. administration. The firm's updated price target of $15.00 is based on 5.4 times the forecasted 2026 sales, an increase from the prior multiple of 4.6 times. This valuation places Mobileye in line with its peers, which average around 5 times sales.

Mizuho acknowledges Mobileye as the global vision ADAS market leader, considering it fairly valued given the current sentiment around autonomous and robotaxi technologies. However, there is a note of caution regarding Mobileye's market share in China, where it appears to be losing ground. The upcoming analyst day on December 9, 2024, could provide further insights into the company's strategies and market positioning.

In other recent news, Mobileye, a leader in advanced driver-assistance systems, reported mixed third-quarter earnings, experiencing an 11% sequential revenue increase from Q2, but an 8% decline year-over-year due to a 9% drop in EyeQ volumes.

Loop Capital initiated coverage on Mobileye with a Buy rating and an increased price target of $20.00, citing the company's alignment with the growing penetration of ADAS and autonomous vehicle technology.

TD Cowen also showed confidence in the company, raising its price target to $19. Barclays (LON:BARC), despite trimming its price target from $19 to $18, maintained an Overweight rating, acknowledging Mobileye's robust third-quarter performance. Deutsche Bank (ETR:DBKGn) maintained its Hold rating, recognizing Mobileye's ability to uphold its full-year guidance.

Mobileye plans to reduce its operating expenses, currently over $1 billion, by 2025. The company reported a strong operating cash flow of $126 million and its revenue guidance for 2024 remains unchanged, with EyeQ volumes forecasted between 28.4 million and 28.8 million units. These are the recent developments for the company.

InvestingPro Insights

As Mobileye (NASDAQ:MBLY) prepares for its Capital Markets Day, InvestingPro data offers additional context to Mizuho's analysis. Despite the company's leadership in ADAS technology, Mobileye's financial performance has been mixed. The company's revenue for the last twelve months as of Q3 2024 stood at $1.801 billion, with a concerning revenue decline of 10.26% over the same period. This aligns with InvestingPro's tip that analysts anticipate a sales decline in the current year.

On the valuation front, Mobileye's market capitalization of $12.16 billion reflects the market's long-term expectations for the company's ADAS and autonomous vehicle technologies. However, the company is currently trading at a high revenue valuation multiple, as noted by InvestingPro. This premium valuation suggests that investors are pricing in significant future growth, despite recent revenue challenges.

Interestingly, while Mobileye has not been profitable over the last twelve months, InvestingPro Tips indicate that analysts predict the company will be profitable this year. This expectation of profitability turnaround could be a key factor for investors to watch, especially in light of the upcoming Capital Markets Day.

For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips for Mobileye, providing a deeper dive into the company's financial health and market position.

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