- "The Time to Own Is Now," reads the headline of a note from Morgan Stanley's Ravi Shanker reiterating an Overweight rating and $68 target on Mobileye (NYSE:MBLY). "MBLY has been our top supplier pick in [North America] since the IPO thanks to its best-in-any-class growth story which includes 50%+ revenue CAGR through 2020, 75%+ gross margins, 50%+ revenue to FCF conversion, no gross debt, high barriers to entry and high visibility."
- He sees three 2015 catalysts: 1) Growing confidence in strong driver-assistance (ADAS) penetration, following announcements by Nissan/Toyota to make ADAS standard in some markets and to offer it as a low-cost option on other models (other OEMs are expected to follow suit). 2) A decision by Volkswagen regarding its ADAS strategy; the automaker is expected to "adopt an Audi-like approach using mono vision," which would benefit Mobileye long-term. 3) Rising 2015 estimates, aided by new programs, the shekel's decline, and continued margin expansion.
- Meanwhile, Deutsche's Rod Lache is out with a note declaring sales of active safety technologies such as forward crash avoidance/mitigation (FCAM) systems will be better than previously expected, thanks to both strong growth and high ASPs.
- Lache sees both U.S. efforts to promote active safety and automaker competition helping penetration rise to 40%+ in 2020 and nearly 70% in 2025 vs. less than 7% in 2014. He forecasts Mobileye (target hiked by $2 to $55) will respectively post 2018 and 2020 EPS of $1.47 and $2.68.
- Goldman upgraded Mobileye last month. Short interest was a steep 24.4M as of March 31.