Mobileye's Autonomous Emergency Braking Has Wall Street Overjoyed

• Mobileye NV MBLY stock has risen almost 12 percent year-to-date.
• Deutsche Bank’s Rod Lache reiterated a Buy rating and price target of $72 on the company.
• The announcement on Friday by U.S. DOT and IIHS that 10 automakers had agreed to include Autonomous Emergency Braking on all their new U.S. models as a standard feature exceeded expectations.

Suppliers expect to achieve 80-90 percent penetration within five years, while Rod Lache expects “aggressive and broad deployment” to strengthen the company’s market share, given that Mobileye’s technology offers OEMS high functionality and accuracy at the lowest cost.

With the basic autonomous braking system costing between $120 and $350 per vehicle, the U.S. market alone is expected to initially ramp up to $1.7-5.3 billion. The company’s Mono-Vision system is expected to “benefit disproportionately,” from this.

With high accuracy and the broadest functionality, Mobileye’s technology is “capable of stopping vehicles from highway speeds, detecting pedestrians or animals, and many other safety and convenience features,” the Deutsche Bank report said.

Citi’s Itay Michaeli Agrees

Citi’s Itay Michaeli has also maintained a Buy rating and price target of $77 on Mobileye, mentioning that last week’s meeting with the company’s CEO has made Citi increasingly bullish on the company.

According to the Citi report, “[W]hen affordable life-saving technology is introduced into a car, regulators often act to make it standard.”

“A good rule of thumb is that such technologies can gradually ramp to ~67 percent global penetration,” the report went on to say. So, with the DOT/IIHS announcing that 10 automakers have agreed to make the Autonomous Emergency Braking system standard, Michaeli expressed optimism regarding Mobileye’s 2017 results.

“Mobileye can currently offer OEMs the lowest-cost solution by bundling AEB, LDW and even convenience features that OEMs can profit from (ACC) in a camera-only configuration,” Michaeli stated, while stating that a majority of the company’s 2017 revenue is likely to have already been booked.