Mobileye stock hit the ceiling on Friday after surging on Thursday due to the news of the partnership with HERE. The strategic partnership will focus on crowd-sourced HD mapping, and analysts at one firm feel that this reduces the risk of volatility associated with the Consumer Electronics Show next week. Those at another firm feel that the partnership boosts Mobileye’s competitive advantages.

Mobileye NV MBLY
Mobileye NV MBLY

Details on Mobileye’s partnership with HERE

HERE, which was owned equally by Volkswagen, BMW and Daimler, will integrate Mobileye’s Roadbook into its HD Live Map, which is its real-time cloud service. The result will be a new layer of “real-time contextual awareness,” according to Evercore ISI analyst Chris McNally. The integration will also result in greater accuracy on exactly where vehicles are positioned on roads.

Mobileye will also utilize HERE’s Open Location Platform to take in and process raw data from its sensors and maintain Roadbook. Also HERE will take the data from the Mobileye’s sensors and use it to detect changes and maintain its HD Live Map.

McNally said in a note on Thursday that he feels the announcement about the HERE partnership de-risks CES for Mobileye investors, mainly because it suggests that the deal with Volkswagen is essentially done, even though one with Daimler isn’t believed to be imminent. The analyst feels that CES is the obvious choice for an announcement about a partnership with Volkswagen, although he adds that it’s VW that to decide when and where to announce it.

Deal offers integrated mapping solution

JPMorgan analyst Samik Chatterjee said in a research note on Thursday that the deal is of course positive because it boosts the “competitive advantages of its core technologies of image processing and dynamic map updates.” He believes that the deal raises the cost for automakers to switch mapping providers.

Audi, Mercedes and BMW now own HERE jointly, so Chatterjee expects these three to be the first automakers to strike deals to share data from the Mobileye sensors on their vehicles. He also expects the sensor maker to pursue deals with other automakers.

Despite the positive from the agreement, the analyst continues to rate Mobileye Stock at Neutral because he expects there to be difficulties reaching agreements with automakers to share their data. This is because of the “likely implications on ability to monetize REM capabilities,” which he said may be demonstrated in the delay in firming up a deal with VW. He also doesn’t feel that there’s enough evidence yet that big progress is being made in software for autonomous driving to “dictate driving policy and path planning.”

Shares of Mobileye stock edged downward by as much as 0.44% to $38.27 during regular trading on Friday after rising by about 10% on Thursday.