Wells Fargo analyst, Richard Kwas, is positive on MobileEye (NYSE: MBLY) after earnings but uses the event to trim his valuation range on a lower multiple. No change to Outperform rating.

Total revenues were $71.8MM (+81% yr/yr), above the $70.7MM consensus. OEM revenues were $61.2MM (+89% yr/yr) and Aftermarket revenues were $10.6MM (+43% yr/yr). OEM pricing was better than expected. Gross margin was 75.4% (+228bp yr/yr). The company’s adjusted operating margin was 53.5% (vs. 43.3% last year). Yr/yr operating profit contribution margin (adjusted for stock compensation expense) was 66.1%. Share count was 238.1MM .

2016 guidance was largely as expected. Total revenues are estimated to be $336-$340MM (+40% yr/yr at midpoint). Consensus was a little higher. The growth outlook was consistent with comments made last month in Detroit. 2H revenues are expected to be higher than 1H revenues. 2H revenue growth should moderate vs. 1H (comps tougher in 2H). For the full year, ASP is anticipated to increase slightly yr/yr. Adj. EPS is anticipated to be $0.68-$0.69 (vs. $0.70 consensus). Adjusted net income is $161-$163MM vs. $160MM consensus. Increased R&D investment expected in 2016 primarily related to the REM/autonomous initiatives.

New original equipment manufacturer (OEM) customers were announced (VW, FAW) as well as significant expansions with existing OEM customers. The company will likely be sourced for additional VW programs (one announced today). 2019 guidance was provided and supports $2+ of EPS in 2019. At these levels, the shares present a compelling value with meaningful regulatory catalysts and content gain opportunities. The move to an open architecture and the Road Experience Management (REM) application should widen MBLY’s competitive moat in the long term.

Little change to estimates but the valuation range drops to $51-$54 (from $54-$56), which applies a P/E multiple of 49x-51x (vs. 50x-52x prior) to 2017E adjusted EPS. No change to the Outperform rating.

For an analyst ratings summary and ratings history on Mobileye N.V click here. For more ratings news on Mobileye N.V click here.

Shares of Mobileye N.V closed at $29.23 yesterday.