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Mobileye shines in Q3 earnings, bolstered by strong China demand

By: MarketBeat

October 27, 2023 at 07:10 AM EDT

Mobileye Global stock

Autonomous driving specialist and Intel Corp. (NASDAQ: INTC) spinoff Mobileye Global Inc. (NASDAQ: MBLY) gapped up at the open on October 26 after beating third-quarter profit and revenue estimates.

MarketBeat’s Mobileye Global earnings data show the company earning 22 cents a share on revenue of $530 million. Wall Street was expecting net income of 17 cents per share and revenue of $528.63 million.

Mobileye also narrowed the range for its expected operating loss in the current quarter, saying it now expects to lose between $62 million and $79 million, significantly better than its previous forecast of $98 million to $129 million.

Mobileye’s customers include BMW, Audi, Ford Motor Co. (NYSE: F), General Motors Co. (NYSE: GM), Honda, Kia, Hyundai, Nissan and Volkswagen AG (OTCMKTS: VWAGY). It’s also working with FAW, one of China’s largest automakers, and electric vehicle maker Polestar, a joint venture between Sweden’s Volvo and China’s Zhejiang Geely Holding Group.

In its earnings release, Mobileye said its business development pipeline continued to be robust in the quarter, adding that it was on track for 2023 to exceed 2022 in terms of business volume, revenue, and average system price.

Growing EV demand in U.S. and China

The strength of quarterly results suggests that demand from China remains strong, despite a slow overall economic recovery. It also points to growth of EV sales in the U.S. market, despite EV uptake not being as strong as automakers and policymakers had hoped.

In the earnings release, Mobileye CEO Amnon Shashua cited several positive developments in the quarter, including the August rollout of the company’s SuperVision Pilot functions, added to 110,000 Zeekr vehicles.

Zeekr is an EV brand developed by Geely. Mobileye and Geely began collaborating in 2021, and the partnership continues to grow.

China is one of Mobileye’s key markets. In the third quarter, Mobileye made headway installing more of its products into Polestar and FAW vehicles. The company also cited new interest from an additional wave of global automakers in the quarter, as well as continued progress with other prospects.

Current focus is safety features

Mobileye’s current focus is on driver safety features, rather than completely autonomous vehicles. In regulatory filings, the company said that while advanced driver assistance systems (ADAS) are central to the advancement of automotive safety, “We believe that the future of mobility is autonomous.”

It added that mass adoption of autonomous vehicles is still nascent.

“Full autonomy - where a human is not actively engaged in driving the vehicle for extended periods of time - requires the autonomous driving solution to be capable of navigating any environment in any condition at any time,” the company said.

It noted that a substantial amount of data is needed to enable autonomous driving at any kind of significant scale. It also needs to be produced at an affordable cost. Achieving those goals is among Mobileye’s business objectives.

Analysts see double-digit upside

MarketBeat’s Mobileye Global stock forecast and price target show a consensus view of “moderate buy” with a target of $47.56, an upside of 28.02%.

If the stock achieves that price target, it would be trading at its best levels since June, as you can see on the Mobileye Global chart.

The Israel-based company’s stock was attempting a rally on October 6, but recent events sent it lower, and it’s now trading below its 200-day moving average. With the upside price action on October 26, it regained its 50-day average.

In the earnings release, Shashua acknowledged the Israel-Hamas war, saying, “Since the end of Q3, the tragic events in Israel have affected us all, but strong business continuity planning, lessons learned during Covid-19 disruptions, and the diligence of our remarkable team has enabled us to limit disruption and continue to execute our business priorities.”

Reassuring investors

That verbiage is clearly intended to reassure investors that the company is able to maintain its focus, but time will tell if that remains the case.

A look at the iShares MSCI Israel ETF (NYSEARCA: EIS) chart shows the index of Israel-based companies down 17% since the close on October 6. It’s possible that Mobileye Global, which is not an index component, can buck that trend in the near term. However, it’s typical to see stocks move in tandem with a relevant index.

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Mobileye shines in Q3 earnings, bolstered by strong China demand

Growing EV demand in U.S. and China

Current focus is safety features

Analysts see double-digit upside

Reassuring investors

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