(Bloomberg) — Shares of Mobileye Global Inc. fell as much as 29% after the Israeli maker of autonomous driving technology gave full-year sales forecast that was well below Wall Street expectations.
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Israel's most valuable listed company, which makes semiconductors for driver assistance systems in vehicles, said in a preliminary earnings report on Thursday that it expects full-year 2024 revenue of $1.83 billion to $1.96 billion, much less than the average analyst estimate of $2.58 billion.
The Jerusalem-based company, which counts Porsche and Volkswagen AG among its customers, attributed the lowered forecast to customers scaling back their orders after building up inventory during the pandemic. First-quarter sales are also expected to decline about 50% year-over-year.
“We have become aware of excess inventory among our customers,” Mobileye said in its statement Thursday. “As supply chain concerns have eased, we expect our customers to consume the majority of this excess inventory in the first quarter of the year.”
The selloff impacted the entire chip industry. Rivals including NXP Semiconductor NV, STMicroelectronics NV and Texas Instruments Inc. all fell during Thursday trading. Intel Corp., which spun off the company in October 2022 but still holds about 88% of the shares, saw shares fall as much as 3.9%.
Read more: Problems in the chip market pose a threat after AI euphoria
Demand for automotive chips remained stronger than other parts of the electronics industry, helped by the addition of more electronic features in each vehicle. That may no longer be enough to support high levels of chip shipments as overall demand for cars slows and the surge in sales of electric vehicles – which require even more chips – shows signs of slowing.
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Mobileye's results led to downgrades from Wall Street analysts. Wolfe Research's Rod Lache cut his recommendation from “outperform” to “peerperform.” Raymond James' Brian Gesuale lowered his rating to “Outperform” from “Strong Buy” and reduced his price target to $48 from $50. He said earnings could take longer to materialize than Wall Street expects.
Read more: Mobileye plunges 28% after revenue forecast misses estimates
“The potential for negative estimate revisions could deprive shares of a natural catalyst to drive shares sustainably higher in the near term, even as expectations grow that the company is poised to announce incremental customer wins,” he wrote in a note.
Shares of Mobileye rose 24% in 2023 to close at $39.72 on Wednesday. Of the analysts covering the company, 23 have a “buy” rating, four say “hold” and one recommends “sell”. The average 12-month price target is $47.32.
– With support from Ian King and Mark Tannenbaum.
(Updates with additional details from second paragraph)
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