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TD Cowen changed its stance on the stock from a buy to a hold on Friday. This downgrade comes just after the company shared its latest quarterly numbers and raised its full-year outlook. While the average price target across all analysts who follow the stock sits at 11 dollars, the current share price is closer to 6 dollars.
When a major firm moves to a hold rating, it often means they see fewer reasons for the stock to rise in the near term or have concerns about the broader market for car technology. For a company like Mobileye, which is trying to move from basic safety chips to expensive self-driving software, this shift suggests analysts are taking a more cautious view of how quickly that transition will happen.
Source: TD Cowen
After Mobileye reported its October results, we updated our fair value. We have added the cost of memory chips that the company passes through to customers at no profit to our revenue tracking. We also added the impact of Chinese car exports to what we watch, as these vehicles use simpler software that reduces the average price the company gets for its systems. We reset our projections for the share of profit that comes from government research grants rather than technology sales.
Mobileye reported adjusted earnings of 11 cents per share, which was slightly better than the 10 cents analysts expected. While revenue of 492 million dollars was down about 2 percent from last year, the company managed to grow its operating income by 20 percent. This shows the business is becoming more efficient even while its top-line growth remains slow.
Management also raised the low end of its full-year sales forecast, now expecting at least 1.99 billion dollars for 2026. This suggests that the demand for its driver-assistance chips is stabilizing. With 1.5 billion dollars in cash and no debt, the company has a strong cushion to fund its shift from basic safety features to more advanced self-driving systems.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
After Mobileye reported its July results, we cut our quality score to 3.9 out of 5 to reflect new risks in leadership, competitive protection, and returns on invested capital. We have added the transition following the founder's departure and the impact of the new Israeli research and development law to what we watch. We also added the acquisition of a robotics firm to the growth drivers we track and raised our full year revenue projections.
TÜV SÜD, a firm that audits and certifies technical safety, gave the company an inspection certificate for its automatic emergency braking development. This confirms the company's processes follow ISO 21448, which is the international standard for ensuring that automated driving features work safely and as intended. While this is a routine part of developing automotive technology, it is a necessary step for the company to keep selling its systems to global carmakers. It serves as an independent check that the software powering these safety features is being built to the highest industry standards.
Source: Business Wire
Management consistently sets a low bar and clears it by a few cents every quarter. This suggests they have a tight grip on their numbers even as the car market slows down.
| Expectation | |
|---|---|
| EPS | $0.09 |
| Revenue | $455M |