Shares of Mobileye (MBLY) are on the rise after the company announced a strategic partnership with HERE, linking both companies' autonomous driving technologies. Commenting on the deal, Wells Fargo analyst Richard Kwas told investors that it may serve as "a building block" to generate a recurring revenue stream.

PARTNERSHIP: Mobileye and HERE announced plans for a strategic partnership that links their respective autonomous driving technologies into an offering for automakers. Among the collaborative initiatives the two companies intend to pursue are the integration of Mobileye's Roadbook with HERE HD Live Map, Mobileye's utilization of the HERE Open Location Program and HERE use of raw sensor and observation data from Mobileye. In parallel, both companies also intend to explore other potential opportunities where their products and services are complementary to further support automotive companies in advancing their autonomous driving and mobility strategies generally.

DEAL POSITIVE FOR SHARES: Wells Fargo's Kwas told investors in a research note that he believes Mobileye's strategic partnership with HERE "may serve as a building block" to generate a recurring revenue stream in the future. While the analyst acknowledged that more details are needed to better understand the significance of this partnership, Kwas pointed out that he believes the announcement should be a positive for Mobileye's shares. With the company making multiple presentations at the Consumer Electronics Show, which will be held in Las Vegas in January, the analyst believes other announcements involving Road Experience Management, or REM, are forthcoming. Kwas has an Outperform rating on Mobileye's shares, as he believes the continued acceleration in advanced driver assistance systems take rates and investment in autonomous capabilities will drive "strong top-line and earnings growth" for the company over the next few years.

PRICE ACTION: In late morning trading, shares of Mobileye have gained over 6% to $37.17.