Why Mobileye Bears Are Missing The Big Picture

Reviewing Mobileye NV MBLY's third-quarter results, Barclays said bears are missing the bigger picture on the company's REM.

3Q Review

Analyst Brian Johnson noted that the company exceeded expectations in the third quarter and showed solid ASP growth while continuing its string of ADAS and level 3/4 wins. The company also raised its full-year guidance toward the high-end, the analysts said.

3 Reasons REM Financials Will Emerge Eventually

The lack of any financial details of a REM deal with Volkswagen AG (ADR) VLKAY VLKPY, according to the firm, led to criticism. The firm reasoned that specific OEM-PartCo price lists are closely guarded trade secrets. The firm also said it sees the main value of REM as locking in the Advanced Driver Assistance Systems, or ADAS, and semi-autonomous share for the company.

Barclays drew a simile with the iPod in 2006, around which Apple Inc. AAPL established itself when iPhone was launched, with competing MP3 players being rendered irrelevant even as they offered Apple-like features.

Additionally, Barclays expects some revenue guidance once a mapmaker and other OEMs are signed up.

Strong Signing Momentum

Barclays noted that the company secured two level 4 program awards in the quarter, with the awards now totaling four. The company also secured additional business with Hyundai-Kia along along with a new ADAS program with a current Asian customer launching in 2019, the firm added.

Mobileye Affirmed Top Pick

Barclays reaffirmed Mobileye as its top pick, with the Overweight rating and the $60 price target also reaffirmed. The firm continues to see both near and mid-term upside potential for the stock.

At the time of writing, shares of Mobileye were down 5.42 percent at $37.50, although volume was one-third of the average volume.