Mobileye NV (NYSE:MBLY) investors are overwhelmingly excited today following the news that chip giant Intel Corporation (NASDAQ:INTC) is buying the Israeli automotive supplier for more than $15 billion, marking Intel’s entry into the autonomous driving technology.
The deal values Mobileye at $63.54 a share, a 34% premium to its closing price Friday. As such, Mobileye shares are rising nearly 30% to $61.52 in pre-market trading, while Intel shares are trading flat.
“This acquisition is a great step forward for our shareholders, the automotive industry and consumers,” said Brian Krzanich, Intel CEO. “Intel provides critical foundational technologies for autonomous driving including plotting the car’s path and making real-time driving decisions. Mobileye brings the industry’s best automotive-grade computer vision and strong momentum with automakers and suppliers. Together, we can accelerate the future of autonomous driving with improved performance in a cloud-to-car solution at a lower cost for automakers.”
In addition, Goldman analyst Alexander Duval commented, “Our 12-month price target for Mobileye includes a 30% M&A weighting, based on our view of the strategic value of Mobileye, which is leading the technological drive for autonomous driving solutions […] Further, we note Intel and Mobileye have a partnership (along with BMW) for autonomous driving. On our estimates, the reported US$14-15 bn value would imply 31x 2018E EV/EBITDA, 19x 2018E EV/sales and 11x 2020E EV/sales at the midpoint.”
Mobileye has been the subject of a number of recent research reports. In a report issued on March 10, Citigroup analyst Itay Michaeli reiterated a Buy rating on MBLY, with a price target of $66. On March 2, Mizuho’s Vijay Rakesh initiated coverage with a Hold rating on the stock and has a price target of $50.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Itay Michaeli and Vijay Rakesh have a yearly average return of 6.1% and 27.7% respectively. Michaeli has a success rate of 61% and is ranked #1057 out of 4517 analysts, while Rakesh has a success rate of 73% and is ranked #32.
Overall, 5 research analysts have assigned a Hold rating and 10 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $54.88 which is 16.1% above where the stock closed last Friday.
Mobileye NV engages in the designing and development of software and related technologies for camera-based advanced driver assistance systems. It operates through the following business segments: Original Equipment Manufacturing and After Market. The Original Equipment Manufacturing segment supplies systems on Chip, which includes core intelligence to be ultimately implemented within new vehicles through Tier 1 manufacturers who are system integrators to the automotive industry. The After Market segment engages in selling complete system, which offers advanced driver assistance functions to customers being primarily fleet commercial vehicles, fleet management system providers, new vehicle dealers and importers either directly, through distributors or through insurance companies.