Mobileye NV (NYSE:MBLY) declined after analysts at Raymond James downgraded their rating for the stock. The shares of the company closed $54.25 per share, down by almost 6% today, October 6.

In a note to investors, Raymond James analysts Tavis McCourt and Daniel Toomey reduced their rating for the shares of Mobileye NV (NYSE:MBLY) from Outperform to Market Perform. They also removed their $49 target price for the stock.

According to the analysts, the downgrade was “based strictly on valuation” after the stock price of Mobileye NV (NYSE:MBLY) increase above their price target to a recent level of around $58 per share.

In fact, Mobileye NV (NYSE:MBLY) traded as much as $59.39 per share last week amid investors’ speculations regarding the upcoming “D” and something else announcement of Tesla Motors Inc. (NASDAQ:TSLA) on October 9.

Mobileye’s elevated P/E is justifiable

McCourt and Toomey said the shares of Mobileye NV (NYSE:MBLY) are trading at a 2015 PEG of 1.3x compared to a media peer group at 0.9x at its current level.

In addition, the analysts noted that the stock is trading at a 2015 P/E of 144.3x. They believed that an elevated P/E is justifiable given the company’s market opportunity and its current market-leading position.

Mobileye holds a dominant position in ADAS market

Mobileye NV (NYSE:MBLY) is designer and developer of software and related technologies for camera-based advanced driver assistance systems (ADAS). The analysts noted that the company’s ADAS solution has a dominant market share, and it is aggressively priced compared to a competing technology.

In addition, McCourt and Toomey noted that the company benefits from earnings visibility in the auto industry deals in a long-term contract. The analysts said, “We continue to believe that Mobileye us well-positioned to benefit from increasing ADAS adoption rate and the ultimate realization of an autonomous driving future.”

The analysts anticipated that Mobileye NV (NYSE:MBLY) would achieve a revenue growth of more than 50% and EPS to increase by over 80% in 2015 and 2016.

According to them, a PEG ratio is the most appropriate valuation metric for a company like Mobileye NV (NYSE:MBLY), which is experiencing a high growth combined with a long-term earnings visibility.