Jefferies Warns Mobileye Shares Could Fall 24% on Structural Challenges (MBLY)

Jefferies Starts Coverage With Underperform Rating

Mobileye Global (NASDAQ:MBLY) faces imaginable downside risks tied to structural manufacture challenges and lawsuit concentration, according to Jefferies, which initiated sum connected the banal with an “underperform” standing and an $8 terms target.

The people implies astir 24% downside from the stock’s erstwhile closing terms of $10.53.

Jefferies based its valuation connected a sum-of-the-parts methodology utilizing a blended 2027 endeavor value-to-sales aggregate of 1.9x crossed Mobileye’s concern segments.

That investigation resulted successful an estimated equity valuation of astir $6.51 billion, oregon $8 per share, based connected 816 cardinal shares outstanding.

The valuation besides incorporated nett currency of astir $1.59 billion, portion the implied price-to-earnings ratio astatine the people terms stands astatine 21.2x.

“We spot hazard arsenic skewed to the downside fixed structural threats and cardinal lawsuit dependence,” Jefferies said, adding that “the stock’s re-rating yet depends connected a tiny fig of highly uncertain outcomes.”

Market Leadership Overshadowed by Long-Term Concerns

Mobileye, which remains astir 75% owned by Intel, presently controls an estimated 70% stock of the planetary precocious operator assistance systems market.

However, the company’s banal has fallen astir 75% implicit the past 3 years, portion its endeavor value-to-EBIT aggregate has compressed person to accepted automotive supplier levels aft antecedently trading much similar a high-growth exertion company, according to FactSet information cited by Jefferies.

Revenue and Margin Forecasts Remain Positive

Jefferies projects Mobileye gross of $1.98 cardinal successful 2026, representing maturation of 2.8%.

The brokerage expects income to emergence to $2.24 cardinal successful 2027 and $2.86 cardinal successful 2028, implying maturation rates of 15.2% and 29.2%, respectively.

Adjusted EBIT margins are forecast astatine 10.4% successful 2026, 13.7% successful 2027 and 19.2% successful 2028.

For fiscal 2025, Mobileye reported gross of $1.89 billion, adjusted EBIT of $280 cardinal and an adjusted EBIT borderline of 14.8%.

Relative to statement estimates, Jefferies said its 2026 and 2027 projections are broadly aligned with marketplace expectations, though its 2028 adjusted EBIT estimation of $550 cardinal is astir 10% beneath the $609 cardinal statement figure.

The steadfast forecasts adjusted EPS of $0.27 successful 2026, $0.38 successful 2027 and $0.63 successful 2028.

Robotics Acquisition and Buyback Included successful Forecasts

Jefferies expects Mobileye’s nett currency presumption to summation from $1.84 cardinal astatine the extremity of 2025 to $2.16 cardinal by 2028, contempt projecting a impermanent diminution successful 2027 linked to acquisition spending.