Mobileye Susceptible To Auto Industry Challenges, Inventory Corrections and Geopolitical Factors: Analyst

Needham analyst Quinn Bolton maintained Mobileye Global Inc MBLY with a Buy and lowered the price target from $43 to $36.

MBLY reported preliminary 4Q23 results and provided initial FY24 guidance. 

The 4Q23 operating income was better than expected due to lower operational expenditure, but the FY24 (and 1Q24) outlook was significantly below the Street on the first big inventory correction announcement in autos. 

Bolton's takeaways included MBLY's built up 6 million - 7 million units of EyeQ inventory at Tier 1s and OEMs over a multi-year period. The analyst modeled significant digestion in 1Q24. 

The analyst flagged that MBLY's share at individual customers is unchanged, but its key customers likely experienced share loss vs. Chinese (in China) and Japanese (in the US) OEMs, where MBLY has a lower share. 

The 2024 operating expenditure estimates may be too high if the Israel-Hamas war continues.

Bolton reiterated Q4 revenue and EPS of $635.0 million versus consensus $636.8 million and $0.28 (prior $0.24) versus consensus $0.24.

The price target cut reflects the lower CY25 revenue estimate. He projected CY25 revenue and EPS of $2.68 billion (prior $3.30 billion), versus consensus of $3.46 billion and $0.75 (prior $1.10), against consensus of $1.18.

The analyst projected CY24 revenue and EPS of $1.90 billion (prior $2.48 billion), versus consensus of $2.58 billion and $0.41 (prior $0.80), against consensus of $0.85.

Bolton reiterated CY23 revenue and EPS of $2.08 billion, versus consensus of $2.08 billion and $0.82 (prior $0.78), against consensus of $0.77.

Price Action: MBLY shares are down 1.77% at $30.50 on the last check Friday.