3. Mobileye Global (NASDAQ:MBLY)
Upside Potential: 75.90%
Market Cap: $1.38 Billion
Mobileye Global (NASDAQ:MBLY) is headquartered in Israel and specializes in advanced driver-assistance systems (ADAS) and autonomous driving technologies. Mobileye Global (NASDAQ:MBLY) is majority-owned by Intel. Mobileye Global’s (NASDAQ:MBLY) vision-based systems are integrated into millions of vehicles by more than 50 automotive manufacturers such as Ford Motor, General Motors, Honda, Nissan, BMW, Audi, and Volkswagen which enhance safety and driving efficiency.
In Q2, Mobileye Global’s (NASDAQ:MBLY) revenue increased 84% quarter-over-quarter to $439 million. However, the company faced pressure due to a lowered full-year outlook, now expected to be under $1.7 billion versus previous consensus estimates of $1.83 billion. This revision is largely attributed to market softness in China, rather than company-specific issues. The company’s outlook for 2025 and beyond remains robust, with expectations of substantial volume growth from Western and Chinese OEMs, particularly with the rollout of its SuperVision and other advanced systems.
The shift towards more advanced systems will support Mobileye Global (NASDAQ:MBLY) to sell higher-priced systems. The company has identified key drivers for long-term growth in the ADAS market, and the increased adoption of its newer systems such as EyeQ6, a custom hardware and software solution specifically designed for ADAS and self-driving systems is expected to drive significant growth in average selling price, as the company fulfills its high-volume sales. Mobileye Global’s (NASDAQ:MBLY) REM (Road Experience Management) system provides real-time road information and enhances the safety and effectiveness of autonomous driving. Additionally, its RSS (Responsibility Sensitive Safety) model and True Redundancy approach provide reliable autonomous systems. While competitors focus on cost-effective, camera-only solutions Mobileye Global’s (NASDAQ:MBLY) uses radar and lidar systems which are more accurate. Despite increased competition, Mobileye Global’s (NASDAQ:MBLY) focus on higher-value solutions positions it well to capitalize on the ongoing industry trend towards more autonomous driving systems.
According to a report by Markets and Markets, the global market for Advanced Driver Assistance Systems is projected to expand from 334 million units in 2024 to 655 million units by 2030, growing at a CAGR of 11.9%. The company’s emphasis on advanced systems, combined with its growing customer base and strong market position, suggests significant upside potential.
In its first quarter investor letter Baron Fifth Avenue Growth Fund stated the following regarding Mobileye Global (NASDAQ:MBLY):
“We also modestly increased our positions in The Trade Desk and Mobileye Global Inc. (NASDAQ:MBLY). The assisted and autonomous driving solution provider, Mobileye, experienced significant stock price volatility as a result of reporting weak quarterly results on the back of an inventory build-up, which led the company to reduce near-term shipments materially, resetting expectations for 2024. Despite the near-term cyclical correction, we don’t believe the issues are structural, and we are more focused on the continued adoption of Mobileye’s advanced programs such as Supervision, which would increasingly become the key growth driver for the business.”
In the second quarter, Mobileye Global’s (NASDAQ:MBLY) stock was held by 28 hedge funds with stakes worth $455.40 million. The stock is trading at $13.90 as of August 28. Industry analysts have a consensus on the stock’s Buy rating, setting an average share price target at $24.45, which represents a 75.90% upside potential from its current level.
