Mobileye NV Set To Lead ADAS Market: Barclays

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Mobileye NV (NYSE:MBLY) is rapidly becoming one of the the key players in the advanced driver assistance systems (ADAS) and semi-autonomous driving sector. A September 4th Barclays Equity Research report argues that with use of advanced analytics software and a gargantuan data set, “Mobileye creates a ‘virtuous cycle’ that provides a sustainable competitive advantage and the most cost-effective ADAS solution on the market today.”

Barclays analysts Brian A. Johnson and colleagues currently rate Mobileye as Overweight and have put a $49 price target on the stock.

Mobileye 2Q 2014 earnings results

The firm’s second quarter 2014 earnings results largely matched their guidance for the quarter. Mobileye NV (NYSE:MBLY) reported scintillating revenue growth of 91%, a gross margin of 75% and an operating margin of 43%. These strong results reflect the burgeoning growth of the ADAS market and the company’s very competitive position in that expanding market.

Mobileye Upside-downside scenarios

Mobileye also offered investors updated 2014 guidance. Revenue for 2014 is now expected to come in around $133-135 million compared to the prior outlook of $130 million, which suggests 2H sales of $64-66 million vs Barclays estimate of $67 million; 2014 net income is guided to $41.7-42.3 million, suggesting a 2H net income of $17.9-18.5 million compared to Barclays estimate of $19.9 million. Of note, the second half revenue outlook (revenues down $3-5 million from the first half) makes it clear that in addition to launch-related revenue sorting out, there seems to be some seasonality of revenue, similar to what other auto suppliers experience.

Earnings remain in-line with projections in IPO prospectus

Mobileye EPS

Mobileye NV (NYSE:MBLY)’s earnings per share of 5 cents matched both Barclays estimate and consensus estimates, and the reported net income of $11.2 million was also in-line with our estimate of $11.1 million and guidance of $10.9-11.3 million. Gross revenues came in slightly higher than expected, totaling $33.7 million compared to Barclays estimate of $32.9 million and guidance of $32.9-33.5 million. The firm’s 2Q gross margin of 74.6% was also quite close to our estimate of 74.9%.

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