Mobileye 'A Clear Leader,' But JPMorgan Initiates Neutral

JPMorgan’s Samik Chatterjee believes Mobileye NV MBLY has “emerged as a clear leader in the field of computer vision, which enables ADAS (advanced driver assistance systems) currently and is in the future expected to facilitate semi-autonomous and fully autonomous driving.”

Chatterjee initiated coverage of the company with a Neutral rating and price target of $55.

Growth Outlook

Although Mobileye has very high penetration and robust content-led growth outlook, the analyst mentioned that these positives are already reflected largely in the valuation, while the potential competitive risks and eventual margin pressure might not be fully reflected.

Related Link: Can Anybody Challenge Mobileye In The Driver Automation Space?

“Mobileye’s success has spurred many automotive and non-automotive companies to also invest in technologies that are likely to accelerate progress towards the eventual goal of a driverless vehicle,” Chatterjee explained.

The analyst expects penetration of Level 3 and Level 4 autonomous content to reach 17 percent global light vehicle production by 2030.

There Are Some Risks, Too

Mobileye appears well positioned to leverage the expected growth in autonomous driving and is likely to deliver significantly above market growth well into the coming decade.

“Longer term, however, we expect market share, ASPs, and margin on base content to normalize lower as the technology matures. We see growth decelerating from a +43 percent revenue CAGR in the 2015–2020 period, to +16 percent in 2020–2025, and +10 percent in 2025–2030,” Chatterjee stated.

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