The Volkswagen Endorsement That Could Make Mobileye Stock Worth Buying

Last Friday, Volkswagen issued a press release naming 44 critical suppliers for its Future Automotive Supply Tracks (FAST) initiative. Wall Street analysts were particularly interested in two names that appeared on the list, Mobileye NV MBLY and Delphi Automotive PLC DLPH, and what their inclusion on the list means for the two stocks.

What Is FAST?

According to Volkswagen, the FAST campaign, which launched earlier this year, aims to “successfully implement joint technological innovations even faster than in the past and to realize vehicle projects worldwide even more efficiently and effectively.” The company added that the 44 companies on the list were “chosen for their outstanding performance in their respective field of competence based on a systematic selection process.”

Morgan Stanley’s Take

Analyst Ravi Shanker sees these two companies’ inclusion on the list as an indication of their potential to take on a leading role in the evolution of Advanced Driver Assistance Systems (ADAS). Shanker believes that it’s safe to assume that Mobileye’s inclusion on the list is an indication that the company will be supplying the vision systems on “the majority” of Volkswagen’s automobiles in the near future.

Morgan Stanley has an Overweight rating on Mobileye.

Citi’s Take

Analyst Itay Michaeli believes that the fact that Mobileye and Dephi were the only two names of the 44 listed under the ADAS category indicates that the two companies “are in better standing” with Volkswagen than other peers. Michaeli notes that Toyota Motor Corp TM is now the only major auto supplier not to use Mobileye technology.

Following the news, Citi reiterated its Buy rating on both Mobileye and Delphi.