UBS Raises Mobileye Price Target to $17: A Bullish Signal for the ADAS Leader

UBS analysts have raised their price target for Mobileye Global Inc. (MBLY) to $17 from $14, signaling a bullish outlook for the advanced driver-assistance systems (ADAS) leader. The price target increase comes despite the company's recent guidance for a sharp fall in first-quarter revenue and a lower full-year 2024 revenue outlook. UBS analysts maintain their 'Buy' recommendation for the stock, highlighting the mid-term opportunity from Mobileye's SuperVision driver-assist system.

Mobileye's recent guidance for a roughly 50% decline in first-quarter revenue from the same period last year and a full-year 2024 revenue outlook of between $1.83 billion and $1.96 billion, far short of the $2.56 billion expected by Wall Street, has led to a 24.5% decline in the stock price compared to the S&P 500's 0.3% decline. However, UBS analysts believe that the destocking issue will weigh on the company's 2024 performance but remains confident in Mobileye's long-term prospects.

"Some patience required as stock may be in the proverbial penalty box," the analysts wrote in a client note. "But with [the] stock down -24.5% vs. S&P500 -0.3%, we see an attractive buying opportunity for investors with a 2.3x upside/downside skew."

Mobileye's strong fourth-quarter performance, with revenue increasing 13% year over year to $637 million, operating income and adjusted operating income improving significantly, and a strong balance sheet with $1.2 billion of cash and cash equivalents and zero debt, supports UBS's bullish outlook. The company's growing future business backlog, with 2023 design wins projected to generate future revenue of $7.4 billion across 61 million units, further underscores Mobileye's potential for growth.

Mobileye's strategic expansion in ADAS and key relationships, emphasis on advanced AI products and operational efficiency, and progress in the SuperVision and Chauffeur programs are key drivers behind the company's potential growth. The introduction of the Driving Experience Platform (DXP) is also expected to contribute to Mobileye's growth by enabling OEMs to control the driving experience while leveraging Mobileye's efficient silicon and proven sensing, mapping, and decision-making software.



UBS's price target increase reflects the analysts' confidence in Mobileye's long-term prospects, as they believe the destocking issue will weigh on the company's 2024 performance but there remains mid-term opportunity from its SuperVision driver-assist system. The analysts noted that while the stock may be in the proverbial penalty box, the attractive buying opportunity exists with a 2.3x upside/downside skew.

In conclusion, UBS's price target increase for Mobileye Global Inc. (MBLY) to $17 from $14 signals a bullish outlook for the ADAS leader, as the analysts maintain their 'Buy' recommendation and highlight the mid-term opportunity from Mobileye's SuperVision driver-assist system. Despite the recent guidance for a sharp fall in first-quarter revenue and a lower full-year 2024 revenue outlook, UBS remains confident in Mobileye's long-term prospects. The company's strong fourth-quarter performance, growing future business backlog, and strategic expansion in ADAS and key relationships support UBS's bullish outlook. Investors should consider this price target increase as a positive signal for Mobileye's future growth potential.