Mobileye stock price target raised to $24 by Wells Fargo on strong Q2

Investing.com - Wells Fargo (NYSE:WFC) has raised its price target on Mobileye N.V (NASDAQ:MBLY) to $24.00 from $18.00 while maintaining an Overweight rating, following the company’s positive second-quarter preannouncement. The autonomous driving technology company, currently valued at $15.14 billion, has seen analyst targets ranging from $10 to $33 per share.

Mobileye now expects second-quarter revenue between $502-$506 million, representing 14%-15% year-over-year growth, significantly higher than its initial guidance of approximately $470 million. The company also projects operating income of $98-$104 million, equating to a 20%-21% margin and 24%-32% year-over-year growth. InvestingPro data shows strong returns over both the last month and quarter, with analysts predicting profitability this year despite current challenges.

Intel (NASDAQ:INTC) has announced a secondary offering of 45 million Mobileye Class A shares, worth approximately $840 million at the July 8 closing price, with an additional 6.75 million 30-day option. Intel is also planning to convert an additional 50 million Class B shares into Class A shares but intends to hold these shares for now. According to InvestingPro, Mobileye maintains strong financial health with a current ratio of 7.64, indicating robust liquidity.

Mobileye has agreed to purchase $100 million of Class A common stock at the same price paid by underwriters in the offering, which equates to approximately 5.36 million shares at the July 8 closing price.

The company has also entered into a long-term supply agreement with TSMC for manufacturing its internal imaging radar and some future generations of EyeQ system-on-chips, diversifying from its long-standing relationship with STMicroelectronics for EyeQ products.

In other recent news, Mobileye has reported preliminary second-quarter results, with expected revenue ranging between $502 million and $506 million, marking a 14-15% increase from the same period last year. This growth is attributed to increased demand for the company’s EyeQ system-on-chip products. Mobileye also anticipates adjusted operating income for the quarter to be between $98 million and $104 million, compared to $79 million in the previous year. In a significant development, Intel, Mobileye’s majority shareholder, announced plans to sell 45 million shares of Mobileye’s Class A common stock in a secondary public offering. Mobileye has agreed to repurchase $100 million worth of its shares from Intel at the offering price. Additionally, Intel plans to convert 50 million shares of Mobileye’s Class B stock into Class A stock, with no immediate plans to sell the converted shares. Analysts at Mizuho (NYSE:MFG) and Barclays (LON:BARC) have recently adjusted their views on Mobileye, with Mizuho maintaining a Neutral rating but lowering the price target to $15, and Barclays downgrading the stock from Overweight to Equalweight with a price target reduction to $14. Mobileye has also entered into an agreement with Taiwan Semiconductor Manufacturing Company to produce components for its imaging radar and future EyeQ products.

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