By Eric J. Savitz
Mobileye Global shares are selling off Friday after a Morgan Stanley analyst turned bearish on the provider of software and components for autonomous and assisted driving.
Adam Jonas cut his rating on the stock to Underweight from Equal Weight, with a new target of $25, down from $26. Mobileye shares were down 6.8%, to $28.80.
The primary issue here is "a surprise slowdown" in consumer adoption of electric vehicles. At the time Mobileye went public in October 2022 -- the company was spun out of Intel, which remains the majority shareholder -- rapid growth in EV sales set the stage for wider adoption of the company's SuperVision system, the equivalent of Tesla's Full Self-Driving service, Jonas noted. From his own experience "the SuperVision product is impressive," he added.
But Mobileye faces challenges convincing automakers, hampered by "a sustained deceleration in EV adoption," with some automakers delaying their EV roll-outs, to adopt SuperVision, Jonas said. He noted that Mobileye faces competition from low-cost providers in China, the semiconductor companies Nvidia and Qualcomm, other large tech players, and automakers exploring in-house alternatives.
Mobileye earlier this year slashed its outlook for the March quarter and actual sales were down 48% year over year. Jonas said he is making further cuts to his forecasting model for Mobileye to reflect headwinds to growth from a tougher environment for EVs.
Write to Eric J. Savitz at eric.savitz@barrons.com
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April 26, 2024 14:51 ET (18:51 GMT)
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