Mobileye’s Stock (NASDAQ: MBLY) Makes Pre-Market Moves

Mobileye Global Inc. (NASDAQ: MBLY) is experiencing a surge in pre-market trading following an upgrade from Deutsche Bank, signaling a potentially favorable setup for the autonomous driving technology company. The stock is currently up 4.64% in pre-market trading, spurred by the analyst's positive outlook ahead of the Q3 earnings release.

Deutsche Bank upgraded Mobileye to a Buy rating from Hold, setting a price target of $19. This upgrade reflects confidence in Mobileye's ability to surpass its Q3 expectations and subsequently raise its full-year guidance. The firm believes that current expectations are muted, particularly concerning new design wins, further highlighting the potential for positive surprises. A notable 18% of the company's shares are currently sold short, suggesting a degree of skepticism within the market that this upgrade directly challenges.

This positive sentiment builds upon a series of recent analyst actions. Bank of America Securities upgraded Mobileye to Neutral from Underperform in February, raising the price target from $12 to $19, citing potential catalysts in 2025 from anticipated OEM contracts for SuperVision and Surround ADAS. While acknowledging potential delays in profitability and increasing competition, the upgrade reflects a shifting perspective on Mobileye's near-term prospects. Wells Fargo also demonstrated increased confidence in Mobileye, maintaining an Overweight rating and raising the price target from $18 to $24 in July.

Beyond analyst upgrades, strategic partnerships are also playing a crucial role in shaping market sentiment. The planned introduction of Mobileye-powered self-driving taxis by Lyft (NASDAQ: LYFT) in Dallas by 2026, with expansion plans across multiple cities, fueled a 17% surge in Mobileye's stock price upon announcement. This collaboration underscores the tangible application and market potential of Mobileye's technology.

However, Mobileye has faced challenges. The company reported a 23% year-over-year decline in Q4 2024 revenue due to decreased demand for its EyeQ chips and initially forecasted fiscal 2025 revenue below Wall Street estimates at $1.69 billion to $1.81 billion, citing reduced shipments to China amidst intensifying competition. This initial forecast weighed heavily on the stock. Mobileye subsequently revised its fiscal 2025 revenue forecast upwards to between $1.77 billion and $1.89 billion in July, attributing the change to increased demand for its autonomous driving chips as automotive customers replenished stock. This positive revision resulted in an over 8% increase in the company's shares during premarket trading.

Furthermore, Intel's (NASDAQ: INTC) reaffirmation of its commitment to maintaining its majority stake in Mobileye in September 2024, dispelling rumors of a potential divestiture, boosted investor confidence, leading to an over 8% rise in Mobileye's shares during premarket trading. This decision provided stability and quelled concerns surrounding the company's long-term strategic direction.

Despite these positive developments, Mobileye's stock remains down -26.72% year-to-date, indicating that the company still has ground to recover. The upgrades and partnerships highlight the potential for future growth, but the company must navigate competitive pressures and fluctuating demand in key markets, particularly China, to fully realize its potential.

The pre-market surge driven by Deutsche Bank's upgrade underscores the market's sensitivity to positive analyst sentiment and the potential for Mobileye to exceed expectations, but the company's ability to sustain this momentum will depend on its Q3 performance and ability to secure new design wins.