Mobileye dips after Mizuho downgrade

Investing.com -- Mobileye shares dipped in after-hours trading and is down 1.55% premarket Friday following a downgrade by Mizuho analysts, who lowered the stock to Neutral with a reduced price target of $13 from $30.

Mizuho cited concerns over slowing auto sales and increasing competition in key markets as the main reasons for the downgrade.

"Three key reasons for our downgrade: 1) EV/Autos sales are slowing in MBLY's key US/EU growth markets (~50-60% of revs), 2) Rising competition and share loss in China (~30% revs), and 3) SV ramp is slowing at key customer Zeekr, as SV ASP at ~$1000-1500 is 20-30x higher than EyeQ ~$50 and drives rev/EPS upside," said Mizuho analysts.

The firm said Mobileye, a leader in Advanced Driver Assistance Systems (ADAS), is facing slower-than-expected growth in its SuperVision product.

Mizuho analysts noted that SuperVision's ASP of $1,000-$1,500 is significantly higher than EyeQ's ASP of ~$50, which has historically driven revenue.

However, with Zeekr possibly shifting to Nvidia (NASDAQ:NVDA ) and Chinese ADAS suppliers, Mizuho said Mobileye's revenue outlook could be impacted further in 2024-2026.

"We are lowering our ADAS penetration estimates for 2024/25/26E to 26%/36%/40% from 29%/39%/45%," said Mizuho, highlighting concerns over slower growth in the EV/ADAS market and a potential inventory buildup due to weakening auto sales.

Additionally, Mizuho pointed to rising competition in China from domestic OEMs such as Horizon and Black Sesame, which threatens Mobileye's market share. They also raised concerns about Volkswagen (ETR:VOWG_p )'s slower-than-expected ramp with Mobileye's products.

Given the challenges, Mizuho adjusted their earnings estimates for 2025 and 2026, now expecting lower top-line growth and reduced revenue contributions from SuperVision. As a result, they downgraded the stock, saying it is "fairly valued" compared to peers.

Source: Investing.com