Mobileye stock expected to rebound after strong Q2 results, BNP says

Mobileye (MBLY) reported robust preliminary Q2 2025 results, with revenue up 14-15% and operating income up 24-32% year-over-year, prompting price target upgrades from Loop Capital and Wells Fargo to $24. Despite Intel's secondary offering of 50 million shares, the market views Mobileye's concurrent share repurchase, de-risked 2025 earnings outlook, and a new long-term supply agreement with TSMC as strong offsets. These developments, alongside ongoing autonomous driving initiatives, underscore the company's fundamental strength and strategic progression.

Analysis

Mobileye (MBLY) is demonstrating strong fundamental performance that appears to be outweighing the technical pressure from a secondary share offering by its parent company, Intel. The company's preliminary second-quarter results are robust, with projected revenue growth of 14-15% year-over-year to between $502 million and $506 million, and a significant 24-32% increase in operating income to between $98 million and $104 million. This strong financial beat has prompted bullish analyst revisions, with both Loop Capital and Wells Fargo raising their price targets to $24. While Intel's sale of 50 million shares creates a near-term overhang, it is partially mitigated by Mobileye's concurrent agreement to repurchase approximately 6.23 million shares, signaling confidence from management. Strategically, the company is also de-risking its operations through a new long-term supply agreement with TSMC for its next-generation products, diversifying its manufacturing base away from its prior reliance on STMicroelectronics. While long-term catalysts like the Drive and robotaxi initiatives with partners such as Volkswagen and Lyft are not expected to impact near-term earnings, they remain central to the long-term growth narrative, with any new partnerships likely to be received as a positive catalyst.

Key Decisions for Investors

• Investors should weigh the technical selling pressure from Intel's secondary offering against Mobileye's strong fundamental execution and concurrent share repurchase, which may present a strategic entry point on any resulting price weakness.
• Given the robust preliminary Q2 results and significant price target upgrades to $24 from multiple analysts, investors could re-evaluate their positions, as the 2025 earnings outlook is now considered largely de-risked.
• Long-term oriented investors should monitor for progress updates on the 2026 autonomous vehicle rollouts with Volkswagen/Uber and Marubeni/Lyft, as these partnerships are key long-term value drivers beyond the current earnings cycle.
• The new supply agreement with TSMC should be viewed as a significant de-risking event that enhances supply chain security for critical future products, strengthening the company's long-term operational stability.