Mobileye shares slip on RBC downgrade, PT cut to $11

Investing.com -- Shares of Mobileye Global Inc. (NASDAQ: MBLY) slipped 1.6% in pre-open trade on Tuesday after RBC Capital Markets downgraded the stock to "sector perform."

The downgrade came alongside a reduction in the price target, which was cut to $11 from $24, reflecting concerns about the company's near-term prospects.

RBC flags uncertainty regarding Mobileye's ability to secure major wins with Western original equipment manufacturers for its premium products like SuperVision in the coming 6 to 12 months.

While Mobileye is actively in talks with several OEMs, the recent industry-wide guidance cuts from major automakers like BMW (ETR:BMWG), Mercedes, Volkswagen (ETR:VOWG_p), and Stellantis (NYSE: STLA) have created a cautious outlook.

These manufacturers, dealing with elevated inventories and production cuts, are seen as less likely to make major commitments to new technologies in the short term.

“We also worry about more near term negative headlines on its Chinese OEM customers,” the analysts said.

With companies like Zeekr and FAW under scrutiny, there is growing concern about Mobileye's exposure in China, adding further pressure to its stock.

While long-term optimism remains, particularly as the adoption rates for advanced driver-assistance systems such as Level 2+ and Level 3 could eventually spur demand for Mobileye's offerings, the short-term outlook is clouded by the combination of macroeconomic headwinds and internal automaker strategies to develop these technologies in-house.

Mobileye's stock was already under pressure after weak earnings forecasts earlier this year, and RBC’s revised price target, which now assumes lower market share capture for its L2+/L3 products, reflects a more cautious stance on the company's growth potential.

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