On Tuesday, JPMorgan adjusted its stance on Mobileye N.V. (NASDAQ:MBLY), shifting the rating from Overweight to Neutral and reducing the price target to $24 from the previous $38. The decision comes amid growing uncertainties in the automotive market, which have been exacerbated by declining electric vehicle (EV) sales, tepid sales of internal combustion engine (ICE) and hybrid vehicles, and the impact of high vehicle prices coupled with rising interest rates.
The firm indicated that these industry headwinds are further complicated by new tariffs imposed by the United States and the European Union on vehicles from Chinese domestic original equipment manufacturers (OEMs), which were previously considered a relatively strong segment due to their lower-priced EV offerings and cost-efficient manufacturing.
Recent negative data from semiconductor companies with automotive exposure, including reports of inventory adjustments in the second half of 2024, suggest that the near-term demand for Mobileye's Advanced Driver-Assistance Systems (ADAS) could be in jeopardy. Additionally, the tariffs are expected to create a structural challenge and reduce the total addressable market (TAM) for Mobileye's SuperVision product, which is predominantly integrated into Chinese OEM vehicles.
JPMorgan has revised its revenue compound annual growth rate (CAGR) forecast for Mobileye to 27% through 2030, down from 30%, despite a projected 56% CAGR for SuperVision revenue, which now faces low visibility. The firm's valuation now aligns more closely with the average of Mobileye's peers, reflecting the higher cyclicality of the auto market and Mobileye's complete reliance on it, as opposed to its peers' more diversified revenue streams.
The revised fiscal year 2026 estimates factor in the anticipated increase in SuperVision revenue from adoption by Western OEMs but apply a significantly lower earnings multiple. This has led to the establishment of the new December 2025 price target of $24, down from the December 2024 target of $38, as JPMorgan awaits greater clarity on the cyclical and structural factors influencing the market.
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