Deutsche Bank Maintains Buy On Borgwarner Shares, $69 PT


In a research report issued today, Deutsche Bank analyst Rod Lache maintained a Buy rating on Borgwarner (NYSE:BWA) with a price target of $69.00.

Lache said, “BorgWarner’s shares have declined in conjunction with the broader Auto/Auto Parts Universe over the past month due to concerns over the company’s significant European/EUR exposure (48% of BWA’s sales), and signs that growth in other markets (i.e. North America, China) are likely to moderate. While we do not believe that BWA is immune to Auto Industry cyclicality, we believe that its products are nonetheless positioned to deliver accelerating organic growth and margin outperformance over the next 5-years, even in a decelerating Global Auto Production scenario. And the company’s valuation (11.8x 2016) has become too compelling to ignore. BorgWarner is likely the best pure play on fuel efficiency standards for the next 5-years Improving fuel efficiency and emissions/CO2 reduction represents one of the most powerful themes in the Auto Space. Two factors kept us on the sidelines until recently: 1) Valuation, and; 2) Uncertainty over the impact of Electrification. Valuation has clearly improved. And our ongoing analysis of Automakers’ Powertrain strategies leaves us confident of the BWA’s strong growth prospects, as most of the incremental content being deployed over the next 5-years will likely be directed at technologies that are at BWA’s core. We can account for close to half of the company’s $6.5 bn of projected growth from just four products (turbochargers, variable cam timing systems, DCT transmissions, and exhaust gas recirculation).”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Rod Lache has a total average return of 14.9% and a 52.9% success rate. Lache is ranked #207 out of 3336 analysts.

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