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Pro Analysis

Tesla autopilot supplier to rally 25%: Piper

Part of the Mobileye driving assist system is seen on the dashboard of a vehicle during a demonstration for the media in Jerusalem.
Baz Ratner | Reuters
Part of the Mobileye driving assist system is seen on the dashboard of a vehicle during a demonstration for the media in Jerusalem.

Piper Jaffray raised its price target on shares of Mobileye, citing survey results showing increased acceptance of automated driving technology by businesses that use car fleets.

Mobileye creates the chips and software that makes driver-assistance automation possible for automakers such as Tesla and BMW.

"[Piper Jaffray's] survey uncovered rising acceptance of advanced driver assistance systems (or ADAS), which are designed to increase safety and cut costs by using varying degrees of automation in the driving process," Piper Jaffray's Alexander Potter, who reaffirmed his overweight rating, wrote in a note to clients Sunday. "Our new estimates imply a faster rate of ADAS adoption, while also implying that MBLY will maintain its competitive stranglehold on the camera-based ADAS market."

Tesla shares have come under pressure this year on reports of accidents involving vehicles using autopilot technology. Tesla said last week it is working on improving the autopilot system following a May 7 crash in Florida of a driver while the technology was on. On Sunday, Tesla chief Elon Musk tweeted support for MobileEye specifically.

The Piper survey suggests that businesses, which buy large amounts of vehicles at a time, believe the benefits of this autonomous technology outweigh any safety risks.