Mobileye Downgraded to Underweight by JPMorgan

JPMorgan analysts have downgraded Mobileye from Neutral to Underweight, expressing concerns regarding the company’s SuperVision product and its growth outlook. The price target for Mobileye has been revised to $10, down from $16, as analysts’ confidence in the volume ramp of SuperVision has weakened due to difficulties in market penetration and increased competition.

A significant factor influencing the downgrade is Mobileye’s loss of a crucial contract with Zeekr, which has chosen to implement an in-house solution instead of utilizing SuperVision. This shift, along with limited success with Western original equipment manufacturers (OEMs), has led JPMorgan to adjust its expectations for SuperVision’s growth through the end of the decade.

JPMorgan believes this situation may alter investor perceptions of Mobileye, shifting it from a company perceived as having significant growth potential to one that aligns more closely with a maturing Advanced Driver Assistance Systems (ADAS) market. The firm commented that the replacement of SuperVision by an in-house solution at Zeekr, coupled with a reduced volume outlook for electric vehicles (EVs), particularly due to new tariffs from the EU and North America, is likely to result in flat or declining SuperVision volumes in 2025.

Furthermore, the introduction of tariffs in both markets has further complicated Mobileye’s prospects regarding EV-related volumes, raising additional concerns about the company’s growth trajectory. While short-term effects on revenue and earnings are expected to be minimal, JPMorgan’s analysts foresee that diminished long-term confidence in SuperVision’s volume ramp will negatively impact investor sentiment.

The analysts now evaluate Mobileye in a manner more akin to other high-growth auto suppliers, albeit with a “modest premium,” rather than the “outsized growth and valuation premium” that was previously anticipated.