Several investment banks initiated coverage on the Israeli-based MobileEye, following its successful initial public offering earlier this month. MobileEye, which counts automakers such as BMW, Audi, Jaguar Land Rover, Tesla (TSLA) , Ford (F) , Honda (HON) and Nissan (NSANY) as customers, shipped 1.3 million chips in 2013 to help automakers develop advanced driver assistance systems and semi-autonomous markets, noted Barclays Capital analyst Brian Johnson, who rates shares "overweight" with a $48 price target.
The company also believes its radar, sensor, microchip and camera technologies will allow it be the first to develop a semi-autonomous driving car at highway speeds. MobilEye is designing the first system for hands-free driving at highway speeds with two automakers, which it expects to launch in 2016.
"Just as PCs and smartphones transformed computing, software will change the way we drive, and MBLY will likely be at the forefront of that change," Johnson wrote in the note. "In our view, MBLY stock offers considerable upside potential given the company's strong competitive position in the advanced driver assistance systems (ADAS) and semi-autonomous markets, which should drive a 45% revenue [compound annual growth rate or] CAGR through 2020 (largely from ADAS) and a 14% CAGR from 2020-2025 (as semi-autonomous kicks in at scale)."