The bad news for Mobileye (MBLY) shares is priced in, and now is a good entry point for a long-term growth story, according to Deutsche Bank analysts on Friday.
The bank, which has a Buy rating and $39 price target on the stock, said yesterday’s deeply negative reaction to MBLY’s warning about the 2024 outlook reflects a market shock with the unforeseen material destocking of EyeQ chips at its customers, as well as some questions around the trajectory of SuperVision growth amid yet another cut to the outlook.
"Indeed, the company’s 2024 outlook is 27% below the Street on the top-line and 59% below on the operating income line, at the midpoint, representing meaningful downside to overall Consensus expectations," wrote analysts.
"But with bad news largely out of the way, and the sense that 2024 expectations have been de-risked, we believe the path forward could be quite positive for the stock, with significant potential catalysts along the way," they added.
The bank believes the potential catalysts will start with CES next week, and as new OEMs sign up for SuperVision over the next few months, they feel it will validate Mobileye’s long-term potential.