Mobileye Global Hit By Surprise EV Slowdown; This Analyst Turns Bearish

Mobileye Global Inc MBLY reported a 48% year-on-year revenue decline for the first quarter.

According to Morgan Stanley, the stiff competition and the unexpected downturn in electric vehicle (EV) adoption limits Mobileye's TAM (total addressable market) through 2030.

The Mobileye Global Analyst: Adam Jonas downgraded the rating for Mobileye Global from Equal-Weight to Underweight. He also lowered the price target from $26 to $25.

The Mobileye Global Thesis: While Mobileye Global's SuperVision product is "impressive," its potential relies on several factors that are outside the company's control, Jonas said in the downgrade note.

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"While we see significant value in Mobileye’s position as a market leader in computer vision and core ADAS offerings," there are headwinds for new content growth for advanced ADAS systems, the analyst wrote.

The EV deceleration limits the near-term TAM for SuperVision, "as legacy automakers (driven by capital discipline) elect not to allocate their capex and R&D dollars on AV tech for mass market ICE platforms," he added.

Mobileye Global is facing heightened competition within and outside China. Jonas cited low-cost providers, and pure-play semiconductor companies like Nvidia Corp NVDA and Qualcomm Inc QCOM.

Big tech players, like Apple Inc AAPL, are also exploring ADAS. Several automakers are also exploring in-house solutions like Volkswagen AG VWAGY and Xiaomi Corp XIACF, Jonas further stated.

MBLY Price Action: Shares of Mobileye Global had declined by 6.05% to $29.03 at the time of publication on Friday.

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