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Mobileye Spikes On Volkswagen REM Cooperation

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Mobileye Spikes On Volkswagen REM Cooperation

Mobileye NV (NYSE: MBLY) shares popped 7 percent Monday after Reuters confirmed the company's cooperation with Volkswagen AG (OTC: VLKAY) on navigation standards for autonomous vehicles. The partnership is aimed to transform road experience management (REM) systems by 2018.

According to a press release, the REM system “enables crowd-sourced real-time data for precise localization and high-definition lane data that forms an important layer of information to support fully autonomous driving.”

Vehicles operating on the system contribute their data segments to a comprehensive global map.

The companies had signed a Memorandum of Understanding in January 2016 to explore the implementation of Mobileye REM systems in Volkswagen vehicles, and at the time, both investors and analysts reacted positively.

Evercore analyst Chris McNally noted that a Volkswagen partnership could generate a $10 spike in Mobileye stock.

“While we view real-time mapping...as a small incremental positive...the real takeaway is that, to achieve their real-time mapping goal, VW needs a fleet of MBLY enabled mono vehicles,” McNally wrote in a 2016 note.

CLSA analyst Emmanuel Rosner maintained similar optimism.

“With the stock down 20 percent since late summer as delays and competitive announcements emboldened skeptics, we see a favorable risk/reward set-up for MBLY from here,” Rosner wrote. “A deal could confirm REM’s value as a moat and help quantify the material revenue streams it creates. On the back of it, we continue to expect up to 10 automakers partnering on REM, and licensing deals with mapping companies.”

Shares of Mobileye traded recently at $46.73, up 8 percent.

 

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