Aptiv has negative read from Mobileye warning, says Morgan Stanley

After Mobileye (MBLY) issued preliminary 2023 results that were better than consensus and gave a negative business update for 2024 that included guidance for a 50% drop in revenues and substantial operating losses in Q1, Morgan Stanley said the firm “cannot recall another example of an established supplier guiding down 50pct for a quarter” due to excess inventory in the channel. The firm, which also thinks this warning may raise questions about the processes and systems at the company, believes it may take until “deep” into the second half of 2024 to rebuild the market’s confidence. Morgan Stanley sees a negative read through to ADAS-exposed T1 suppliers such as Aptiv (APTV) as well as a possible negative read-across to the broader supply base with exposure to advanced driver assistance systems. Morgan Stanley has Equal Weight ratings on both Mobileye and Aptiv.