Two days ago it looked like Mobileye NV (NYSE:MBLY) would end the first half of the year in the red but now a surprising new partnership in self-driving cars has MBLY crushing the broader market.
It turns out that Intel Corp. (NYSE:INTC) is working with Mobileye to autonomous car technology for BMW (OTCMKTS:BAMXY), according to reports.
And just like that, MBLY stock is up 12% for the year-to-date. As of last night’s close, Mobileye stock was negative to the tune of 1% in 2016. Clearly the market thinks this is a big deal, and it does help expand the company’s position in the industry.
Mobileye has gained cache from its association with Tesla Motors (NASDAQ:TSLA), but it still lags behind NXP Semiconductors NV (NASDAQ:NXPI) and Infineon Technologies AG (ADR) (OTCMKTS:IFNNY) in providing chips to the auto industry.
MBLY Gains Traction
The new partnership extends Mobileye’s relationship with BMW, with which it already has contracts. Mobileye is also a partner with General Motors Company (NYSE:GM) and Volkswagen (OTCMKTS:VLKAY).
Valuation remains a concern with MBLY stock, as Goldman Sachs pointed out earlier this week. Analysts downgraded Mobileye stock to “neutral” from “buy” and trimmed their price target to $40 from $45 based largely on the big moves off the February low.
The long-term outlook, however, remains the same. From the Goldman Sachs report:
“We see Mobileye occupying a highly important strategic position given that the autonomous driving market is moving more rapidly than previously anticipated by the industry, driving traditional (carmakers) to pursue more ambitious timelines and partner with credible software players, as they seek to fend off threats from tech companies.”
Of the 16 analysts covering MBLY stock, three are holds and 13 are buys, according to a survey by Thomson Reuters. Their average target price of $54 gives Mobileye stock implied upside of 15% in the next 12 months or so.
As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.
