NEW YORK (TheStreet) -- Shares of Mobileye (MBLY) are rallying after several research firms initiated coverage of the stock with optimistic notes today. Mobileye designs and develops software and chips for camera-based advanced driver assistance systems, or ADAS, which anticipate possible automobile collisions.
WHAT'S NEW: Mobileye's products will be a key component of cars that drive themselves, known as autonomous vehicles, since its products enable vehicles to see and interpret their surrounding environments, wrote Morgan Stanley analyst Ravi Shanker. ADAS is a near-term opportunity for Mobileye, as the percentage of cars with some form of ADAS system should jump to 50% in 2022 from 2% today, Shanker stated. In five to ten years the proliferation of autonomous cars will be equally critical for the company, the analyst stated.
Additionally, Mobileye has an 80% share of the car "vision" market today, and it may be several years before any competitors could make a dent in the company's market share, Shanker believes. He placed a $48 price target on the shares and named the stock a top pick.
Similarly, Citigroup analyst Itay Michaeli wrote that Mobileye's technology is disruptive, as its products enable lower cost cameras to perform ADAS functions better and more cheaply than competing sensors.
Over the next five to ten years, Mobileye will be a key player in solving the problems caused by car accidents, predicted the analyst, who placed a $48 price target on the shares. Among the other firms that initiated Mobileye with Buy, Overweight or Outperform ratings today were Wells Fargo, Deutsche Bank, and Barclays. Goldman and RW Baird, however, started coverage of the stock with Neutral ratings.
PRICE ACTION: In early trading, Mobileye climbed 4.8% to $40.
ANOTHER TO WATCH: Iteris (ITI) , which develops vehicle detection systems and transportation management systems, rose 10.5% to $1.79.
Reporting by Larry Ramer.