Mobileye Gains Analyst Upgrade On 2025 Catalysts, But Profit Delays And Competition Keep Rating Neutral

Mobileye Global Inc MBLY stock surged after BofA Securities analyst John P. Babcock upgraded it from Underperform to Neutral and raised its price target from $12 to $19.

Given the uncertainty on the growth and profit outlook, Babcock recalled his cautious stance. On that note, 2025 guidance provided during the fourth quarter was below BofA and consensus. However, it limits downside risk to estimates.

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The analyst’s discussions with investors also suggest sentiment is bottoming. In 2025, contract wins with several OEMs in the later stages of contract negotiations for SuperVision and Surround Advanced Driver Assistance Systems (ADAS) could be potential catalysts. On the other hand, earnings growth could take until 2027 to inflect more positively, and the audio-visual (AV) technology market is increasingly competitive.

Babcock’s latest valuation analysis drives his price target revision. The analyst assumes Base/Cloud-Enhanced ADAS volumes will remain relatively steady through 2040.

Babcock expects ADAS products will penetrate a growing portion of the auto market but anticipates the deployment of more advanced AV products will drive a gradual share shift.

The analyst assumed it could take well into the 2030s for SuperVision and Chauffeur to become more readily available on vehicles in North America and Europe and that the number of annual robotaxi vehicles deployed using Mobileye’s Drive will be less than a fifth of Tesla Inc’s robotaxi volumes by 2040.

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Mobileye could announce as many as two to three contract wins in 2025, providing meaningful volumes. The company appears close to securing a SuperVision/Chauffeur contract with a Japanese OEM and a Surround ADAS contract with a European OEM. It also seems close to a Surround ADAS contract with a US-based OEM. While volumes from these potential contracts likely wouldn’t start rolling in for 2-3+ years, an announcement could catalyze the stock and increase confidence in Mobileye’s competitive positioning. Babcock noted a SuperVision/Chauffeur win would be significant.

The analyst adjusted his earnings forecast considering fourth-quarter results, the company’s 2025 outlook and longer-term commentary, and his broader view on the AV market. Babcock’s estimates suggest that while adjusted operating income will improve moderately in 2025, there won’t be much change in 2026. However, he does expect a positive inflection in 2027, with incremental SuperVision volumes ramping up in 2026, Chauffeur in 2026/2027, and Surround ADAS and Drive volumes beginning in 2027.

Babcock projected fiscal 2025 sales of $1.73 billion, fiscal 2026 sales of $1.81 billion, and fiscal 2027 sales of $2.07 billion.

Price Action: MBLY stock is up 16.4% at $18.70 at last check Monday.

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