Mobileye Downgraded to Neutral by UBS as Growth Recovery Delays

Mobileye Global has been downgraded to Neutral from Buy by UBS, with a new price target set at $14, down from the previous $20. UBS analysts note that while Mobileye has long-term potential as a crucial partner for automakers outside of China, the path to significant growth is anticipated to be slower than previously expected.

They predict that 2025 will serve as a transition year for the company, likely necessitating substantial downward revisions to consensus revenue forecasts. UBS’s estimates for Mobileye’s revenue between 2025 and 2027 are approximately 28% lower than the consensus.

According to UBS, the stock may remain stagnant until this ‘reset’ occurs, further complicated by Intel’s ownership, which adds uncertainty to the situation. The downgrade highlights several challenges for Mobileye, particularly the delayed growth of its SuperVision (SV) system, a key element of its growth narrative.

UBS explains that Mobileye’s growth had depended heavily on the higher average selling price (ASP) of the L2+ SuperVision system, with Zeekr being a primary customer. However, Zeekr has opted for an in-house solution, which has constrained volume growth.

Concerns extend to other potential SV customers, such as FAW and Polestar, prompting UBS to reduce its forecast for SV unit sales in 2025 by 40%, bringing the estimate down to 71,000 units. UBS does not anticipate a rebound in SuperVision volumes until 2026, when a contract with the Volkswagen Group is expected to drive sales. However, they remain cautious and predict lower unit sales for both 2026 and 2027 compared to consensus projections.

For UBS to revise its outlook, there would need to be clear signs of increased adoption of Mobileye’s advanced products, possibly linked to legacy automakers striving to compete with Tesla and Chinese manufacturers. While positive announcements could emerge by the end of the year, UBS believes substantial developments are more likely to materialize in 2025.

Given the ongoing uncertainties and delayed growth prospects, UBS prefers to take a cautious approach for the time being.