Investing.com -- JPMorgan analysts downgraded Mobileye to Underweight from Neutral, citing concerns over the company's SuperVision product and its growth outlook.
The downgrade comes with a revised price target of $10, down from $16, as JPMorgan's confidence in SuperVision's volume ramp has diminished due to challenges with market penetration and competition.
The main issue driving the downgrade is Mobileye's loss of a key contract with Zeekr, which opted to replace SuperVision with an in-house solution.
This development, combined with limited traction with Western original equipment manufacturers (OEMs), has led JPMorgan to lower its expectations for SuperVision's growth through the end of the decade.
According to JPMorgan, this is likely to shift investor perception of Mobileye from a company with outsized growth potential to one more closely aligned with a maturing ADAS (Advanced Driver Assistance Systems) market.
JPMorgan stated, "We expect the displacement of SuperVision by in-house solution at Zeekr and the lowered volume outlook for EVs, including following tariffs introduced by EU and North America, to drive SuperVision volumes to be flat to down y/y in 2025E."
They add that the introduction of tariffs in both the European Union and North America has further clouded the outlook for Mobileye's EV-related volumes, adding to concerns about the company's future growth trajectory.
While the near-term impact on revenue and earnings is expected to be limited, JPMorgan's analysts anticipate that the reduced long-term confidence in the volume ramp for SuperVision will weigh on investor sentiment.
The analysts now value Mobileye more in line with other high-growth auto suppliers, but with a "modest premium" rather than the "outsized growth and valuation premium" that had previously been expected.