Mobileye's stock is down 70% this year - and J.P. Morgan says it's not done falling

By Emily Bary

Four of 30 analysts are now bearish on the self-driving-technology stock, and the latest one sees about 20% further downside

Shares of Mobileye Global Inc. have gotten beaten down this year as the maker of self-driving technology deals with inventory gluts at its customers as well as pressures in China.

But J.P. Morgan analyst Samik Chatterjee thinks the pain may not be over yet. Mobileye shares (MBLY) were down 70% on the year through Friday's close, and his new price target of $10 implied more than 22% downside from there.

Chatterjee downgraded Mobileye shares to underweight from neutral early Monday, and shares moved 4.6% lower on the day. Of the 30 analysts tracked by FactSet who cover the stock, 17 have buy-equivalent ratings, nine have neutral-grade ratings and four have sell ratings. That's the most sell ratings since the company went public in 2022, according to FactSet data.

Mobileye offers an advanced driver-assistance system called SuperVision, and Chatterjee expects volumes for that product to moderate in the short term. Among the challenges are market-share losses to Zeekr's in-house offering and tariff pressures in China. Those factors could "significantly curtail growth opportunities" next fiscal year and cause volumes to be either flat or down, he said.

"We expect the slower ramp of SuperVision volumes with Western [original-equipment-manufacturer] customers and now the share loss to an in-house solution to increase concerns and lower visibility into the earlier anticipated high-growth opportunity for the company," he wrote.

Chatterjee also expects "the challenges in ramping SuperVision volumes to lead to concerns around drivers for a premium valuation."

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He also weighed in on the company's EyeQ system-on-chip business.

"Management has indicated expectations for EyeQ shipments to rebound completely in [2025] from the inventory digestion led headwinds in 2024," he wrote. That implies perhaps 35 million units. But Chatterjee and his team are adopting "a more conservative view" of 33 million units, with the "auto production outlook continuing to deteriorate."

Shares of Intel Corp. (INTC), which is Mobileye's majority shareholder, ended Monday's session 0.9% lower. Intel recently reassured investors that it wasn't planning to sell its stake in the company.

Read: Should Qualcomm take over Intel? Why Wall Street isn't sold on a possible deal.

-Emily Bary

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10-07-24 1633ET

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