Mobileye stock price target cut amid guidance revision

On Wednesday, Baird adjusted its outlook on Mobileye N.V. (NASDAQ:MBLY), a leader in autonomous driving technologies, by lowering the stock price target to $17 from the previous $24, while maintaining an Outperform rating on the stock. The revision follows a significant decrease in the company's 2024 guidance, which includes a downward adjustment of 3.5 million EyeQ chip shipments and a substantial cut in SuperVision unit guidance.

Mobileye's shares have experienced a notable decline after the updated guidance was announced. The ongoing challenges have been compounded by the announcement that Zeekr 001 vehicles will now only include SuperVision technology in their base trim models, which is expected to represent 20-30% of the model's total volume. This development has added to the pressures facing the company.

As the third quarter of 2024 approaches, Baird suggests that further revisions to SuperVision expectations may be on the horizon. The firm also points to the unpredictable nature of the Chinese market as a continuing risk factor for Mobileye. Given these uncertainties, Baird recommends a cautious stance leading into the upcoming earnings report.

Despite the near-term headwinds, Baird anticipates a potential shift towards more favorable news for Mobileye in the future. This includes likely SuperVision/Chauffeur awards, a possible increase in focus on surround view Advanced Driver-Assistance Systems (ADAS), and investor expectations for the company’s capital markets day in December. The firm emphasizes the importance of appropriate framing of the underlying financial assumptions ahead of this event.

In other recent news, Mobileye N.V has been under the lens of several analysis firms. UBS downgraded Mobileye from Buy to Neutral, citing a transition period in 2025 and a decrease in its price target to $14.00.

The firm's revenue estimates for 2025 to 2027 are approximately 28% lower than the market consensus. Meanwhile, Deutsche Bank has resumed coverage with a Hold rating and a price target of $15.00, expressing caution due to the company's current challenges.

Canaccord Genuity maintained a Buy rating with a steady price target of $27.00, expressing confidence in the company's potential to overcome current challenges. Wolfe Research assumed coverage with a Peerperform rating, indicating a neutral stance on Mobileye's stock. RBC Capital reduced its price target from $34 to $24, while Citi revised its price target from $53.00 to $32.00, both maintaining their respective ratings.

Mobileye reported robust Q2 growth with an 84% revenue increase, reaching $439 million, primarily driven by increased EyeQ and SuperVision volumes. Despite facing challenges in the Chinese market, Mobileye remains optimistic about its long-term prospects in the region, particularly through collaborations with Zeekr on next-generation vehicles.

InvestingPro Insights

Recent data from InvestingPro sheds additional light on Mobileye's current situation, aligning with Baird's cautious outlook. The company's stock has taken a significant hit, with a 54.12% decline over the past three months and a 68.85% drop over the last year. This steep decline reflects the market's reaction to the challenges outlined in the article, particularly the reduced guidance for 2024.

Despite these setbacks, InvestingPro Tips highlight some positive aspects. Mobileye holds more cash than debt on its balance sheet, and its liquid assets exceed short-term obligations, indicating financial stability amidst the current turbulence. Additionally, analysts anticipate that the company will be profitable this year, which could provide some reassurance to investors.

However, it is important to note that Mobileye is currently trading at a high revenue valuation multiple, suggesting that the market may still be pricing in future growth potential despite the recent setbacks. For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for Mobileye, providing a deeper understanding of the company's financial health and market position.

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