NEW YORK (TheStreet) -- Shares of Mobileye (MBLY) are dropping 8.34% to $44.19 on heavy trading volume Tuesday afternoon after the Jerusalem-based technology company announced it would no longer supply sensor chips to electric car maker Tesla Motors (TSLA).
Mobileye said its relationship with Tesla will not continue beyond supplying its EyeQ3 chip as it looks for closer collaborations with other companies.
Citigroup analysts defended the split, saying it's unlikely to leave a major impact on the company. The firm maintained its "buy" rating on the company, as well as its $66 price target, Barron's reports.
"We do not believe that Tesla is material to Mobileye's current financial results and note that mamangement did not change its 2018 revenue outlook (Tesla accounts for ~2% of 2019 guided revenue)," the firm said in an analyst note according to Barron's.
Before today's opening bell, the company reported better-than-expected second quarter earnings and revenue.
Mobileye posted earnings of 17 cents per share, exceeding analyst estimates of 15 cents per share. Revenue increased 58% year-over-year to $83.5 million, beating analyst projections of $77.31 million.
About 22.05 million of the company's shares changed hands so far today versus its average 30-day volume of 4.20 million shares per day.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate MOBILEYE NV as a Hold with a ratings score of C-. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and premium valuation.
You can view the full analysis from the report here: MBLY