HYMLF - A Small Q3 Pothole Creates A Pullback Opportunity With Valeo
- Valeo shares sold off after third quarter sales numbers that disappointed the market, including the first quarter since Q1'18 where Valeo didn't outperform underlying light vehicle production.
- Valeo continues to see content wins in 48V and ADAS, and the mix issues that hit third quarter results shouldn't create the same headwinds in the fourth quarter.
- Management upgraded margin and free cash flow guidance for Q4; a new union contract helps the cost/margin story and stronger cash flow reduces the risk of a bond rating downgrade.
- Valeo shares still look meaningfully undervalued as a play on a passenger vehicle market recovery and hybrid/EV and ADAS adoption.
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A Small Q3 Pothole Creates A Pullback Opportunity With Valeo