Morgan Stanley initiates Mobility Global stock coverage at Equalweight

Morgan Stanley has begun covering Mobility Global Inc. (NYSE:MBGL) with an Equalweight rating and has set a price target of $19.00 per share. The stock is currently trading at $18.08, close to its 52-week low of $16.95. Morgan Stanley believes Mobility Global to be a leading automotive data and analytics provider, with a strong position in the used and new car markets, primarily driven by its CARFAX franchise. The company's data services are valued at $78 billion, encompassing 177,000 data sources and 38 billion records.

Morgan Stanley highlights that Mobility Global generates over 80% of its revenue from subscription-based services and operates in a market worth $78 billion. The firm considers the company a high-quality, capital-light business with durable growth and a robust competitive position. Despite this, Morgan Stanley points out that the stock is undervalued, trading at a low price-to-book multiple of 0.54 and generating impressive gross profit margins of 71%.

The analyst emphasizes that Mobility Global's data estate, which includes 800 million VINs, underpins its strong position in the automotive information services industry. The company's strategic focus on subscriptions and organic growth of 7.5% to 10% through 2028 is well-received by Morgan Stanley. Despite this, the analyst acknowledges that the recent 7% increase in second-quarter revenue to $468 million was below expectations, leading to a revision of the full-year revenue outlook.

Mobility Global's adjusted EBITDA rose by 7% to $202 million, and GAAP net income fell by 18% to $53 million, partially due to separation costs from its spinoff from S&P Global.