Mobileye's (MBLY) Valuation 'Rich', Pacific Crest Starts at Sector Weight
- Wall Street ends higher, notches weekly gains as Fed meeting looms
- Intel pares losses but sheds $9 billion in value on dire outlook, dividend concerns
- Analysts rush to cut Intel (INTC) price targets following weaker than expected Q1 guidance
- Lucid Group (LCID) doubles on Saudi rumors
Pacific Crest initiated coverage on Mobileye N.V (NYSE: MBLY) with a Sector Weight rating. Analyst Brad Erickson said the stock's valuation is rich, and he described ADAS sentiment as "frothy."
"Mobileye has a huge technology lead in active safety/autonomous driving, but the stock's valuation reflects what we believe are optimistic adoption scenarios for each with little discounting for future competitive risk. Our checks suggest pure ADAS adoption is lower than many realize and the auto supply chain is fraught with structural challenges, which could make sustainable upside scenarios challenging," said Erickson.
"We believe that expecting Mobileye to improve its leverage with tier-1 supplier partners in the future assumes that tier-1 suppliers' ADAS investments will not be successful. Not a great bet, in our view. Mobileye has quietly lost two partners in the past year (Autoliv and Gentex), with others working on their own in-house developments," continued the analyst.
Erickson added, "Trading at 30x outyear sales and 67x out-year EPS, we believe MBLY's valuation is rich even accounting for high growth, tremendous long-term visibility and superlative profitability. We are valuing the company on what we believe is a well-balanced scenario in 2020 of 45% ADAS adoption, 50% MBLY market share, 60% net income margins and a 20x earnings multiple discounted back, which yields a fair value of $46. Incremental design wins, tier-1 partnerships and OEM ADAS standard fitments could all be upside drivers, but we have reservations around the pace of market adoption and competition, which underpins our Sector Weight rating."
Shares of Mobileye N.V closed at $46.23 yesterday.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Visa adds to gains as cross border travel recovery buoys shares
- Geberit AG (GEBN:SW) (GBERY) PT Raised to CHF555 at Stifel
- Allianz SE (ALV:GR) (AZSEY) PT Raised to EUR230 at JPMorgan
Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS View, Hot Comments, Hot New Coverage, Momentum Movers, New Coverage
Related EntitiesPacific Crest Securities, Earnings
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!