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Wall Street Backs Mobileye

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Wall Street Backs Mobileye
  • Shares of Mobileye NV (NYSE: MBLY) gained more than 5 percent Thursday morning.
  • Tesla Motors Inc (NASDAQ: TSLA) shot down rumors that it has plans to replace Mobileye's technology in its cars.
  • Several Wall Street firms reiterated a bullish stance on Mobileye despite Citron Research naming the company as a top short idea for 2016.

"Going forward, we will continue to use the most advanced component technologies, such as Mobileye's vision chip, in our vehicles," Tesla commented in a blog post. "Their part is the best in the world at what it does and that is why we use it."

While Tesla's blog post put to rest market chatter that it had plans to replace Mobileye's technology, investors still have to contend with the stock being named as a top short idea by Citron Research for 2016.

Related Link: Tesla Stands By Mobileye In The Face Of Scrutiny And Short Sellers

Barclays: Mobileye's Leadership Position ‘Reaffirmed'

Brian Johnson of Barclays commented in a note that over the past few months he "dug deep" on Mobileye, including meeting with senior management at the company's headquarter in Israel.

"Our interactions are timely, as the Mobileye bull-bear debate is heating up heading into the 2016 Consumer Electronics Show early next month," Johnson wrote. "Ultimately, we are increasingly confident that the moats around Mobileye's leadership in ADAS (advanced driver assistance systems) and semi-autonomous driving are widening."

Johnson said that at the Consumer Electronics Show, Mobileye is expected to announce updates to its autonomous driving software capability, including 360 degree vision based sensing, deep learning, and cloud based functionality. Accordingly, these upsides will confirm the company's "lead" against traditional Tier 1 auto suppliers and automotive chip makers.

Bottom line, Mobileye's leadership position supports a "rapid" revenue growth and "impressive" margin expansion for the company.

Shares remain Overweight rated with an unchanged $76 price target.

Deutsche Bank: Buy Ahead Of CES

Rod Lache of Deutsche Bank commented in a note that while automakers are "seeking to foster competition" in artificial intelligence for autonomous driving, Tesla is likely to be among "the first in line" to purchase Mobileye's next generation processor starting in 2018.

Lache said 25 other auto manufactures have "effectively endorsed" Mobileye as offering state of the art technology. The analyst added that even though Mobileye has not won every contract it attempted to gain, his research suggests that the company "continues to perpetuate the highest market share in the industry."

Finally, Lache suggested investors "generally underestimate" the difficulty in replicating Mobileye's current market position and the market, especially average selling prices, will "grow more rapidly than is widely assumed."

Bottom line, Lache argued Mobileye is "well positioned" for the future and more importantly, 2016 will prove to be a "catalyst rich environment" that could "serve to reinforce this view more broadly."

Shares remain Buy rated with an unchanged $72 price target.

Latest Ratings for MBLY

DateFirmActionFromTo
Apr 2017BairdDowngradesOutperformNeutral
Mar 2017PiperJaffrayDowngradesOverweightNeutral
Mar 2017Goldman SachsDowngradesBuyNeutral

View More Analyst Ratings for MBLY
View the Latest Analyst Ratings

 

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