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Automobile industry

Mobileye Gains Momentum with Emergency Braking Pact

Strategic Insights

— 1 min read

Analysts have issued bullish notes on advanced driver assistance systems (ADAS) technology maker Mobileye (MBLY), citing the recent commitment by ten carmakers to make automatic emergency braking (AEB) a standard feature on their vehicles as a significant catalyst for the company's growth. The U.S. Department of Transportation announced that the ten carmakers - Audi, BMW, Ford, General Motors, Mazda, Mercedes Benz, Tesla, Toyota, Volkswagen, and Volvo - will make AEB a standard feature on all new vehicles built, representing 57% of U.S. light-duty vehicle sales in 2014.

Key Takeaways:

  • Ten carmakers have committed to making AEB a standard feature on all new vehicles built, increasing demand for Mobileye's technology.
  • Suppliers expect 80%-90% penetration of AEB within five years, benefiting Mobileye's product mix and average selling price.
  • Deutsche Bank analyst Rod Lache believes Mobileye should "benefit disproportionately" from the adoption of AEB, reiterating a Buy rating with a $72 price target.
  • Morgan Stanley's Ravi Shanker thinks the adoption of AEB as a standard feature can positively impact Mobileye's product mix and average selling price, maintaining an Overweight rating with a $80 target.
  • Citron Research has a bearish view on Mobileye, setting a $25 "short-term" target with a long-term target below $10.
  • Citi analyst Itay Michaeli disagrees with bearish articles on Mobileye, recommending the use of last week's pullback in shares as a buying opportunity, maintaining a Buy rating with a $77 price target.

Statistics:

  • 57% of U.S. light-duty vehicle sales in 2014 were represented by the 10 carmakers committing to AEB (Source: U.S. Department of Transportation).
  • Suppliers expect 80%-90% penetration of AEB within five years (Source: Deutsche Bank analyst Rod Lache).
  • Mobileye's stock price has declined about 20.5% in the last month, despite recent bullish notes from analysts (Source: TheFlyOnTheWall.com).

Sources:

  • TheFlyOnTheWall.com
  • U.S. Department of Transportation
  • Deutsche Bank analyst Rod Lache
  • Morgan Stanley's Ravi Shanker
  • Citron Research
  • Citi analyst Itay Michaeli

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