Mobileye Global Analyst Blames Lack Of Clarity Around OEM Wins For Downgrade

Shares of Mobileye Global Inc MBLY were climbing in early trading on Tuesday, after having lost around 68% year to date.

There is uncertainty around the company's Western OEM (original equipment manufacturer) wins on premium products like SuperVision, according to RBC Capital Markets.

Analyst Tom Narayan downgraded the rating for Mobileye Global from Outperform to Sector Perform, while reducing the price target from $24 to $11.

The Mobileye Global Thesis: Although the company is in active discussions with 14 OEMs on premium products, the clarity around these could come only after six to twelve months, Narayan said in the downgrade note.

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"The concern for us, however, is that given large '24 guidance cuts coming out of BMW, Mercedes, Volkswagen, and Stellantis in just the past few weeks, and cautious commentary coming from other OEMs, we think it less likely that there will be MBLY win announcements near term," he added.

While several OEMs are "focused on managing elevated dealer inventories without needing to sacrifice too much on pricing," some of them are cutting production, which creates substantial headwinds for Mobileye Global's free cash slows in the near term, the analyst stated.

"Finally, there are investor concerns that MBLY's China SV exposures, notably Zeekr and FAW, might not be as robust," he further wrote.

Price Action: Shares of Mobileye Global had risen by 1.47% to $13.20 at the time of publication on Tuesday.

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Image: Courtesy of Mobileye