APTV - Auto suppliers get BofA boost amid higher U.S. car sales

2023-07-06 12:58:40 ET

BofA Global Research raised its price objectives and ratings on auto suppliers including Aptiv ( NYSE: APTV ), BorgWarner ( NYSE: BWA ), Magna ( NYSE: MGA ) and Gentex ( NASDAQ: GNTX ) as automakers report better-than-expected sales.

The firm bumped Aptiv ( APTV ), BorgWarner ( BWA ), and Magna ( MGA ) from Neutral to Buy, and Gentex ( GNTX ) from Underperform to Neutral.

"So far in 2023, volumes have exceeded expectations, particularly in the US where fleet sales have been robust," a team of analysts led by John Murphy said in a July 6 note. "Volumes in Europe have surprised to the upside and, while China remains slow, volumes have largely been in line with expectations."

This week, Ford ( F ) and General Motors ( GM ) reported second-quarter unit sales jumping by 9.9% and 19%, respectively. The U.S. new-vehicle market was "surprisingly strong" in the first half, according to Cox Automotive.

Suppliers have also been aided by raw material and freight costs that have eased, BofA said.

"Given these improving dynamics, we expect strong 2Q:23 results and higher 2023 outlooks, specifically from suppliers," the analysts said.

Price objectives prior vs updated:

• APTV: $130 vs $140
• BWA: $54 vs $67
• GNTX: $26 vs $33
• MGA: $65 vs $85

Shares of the suppliers were higher in afternoon trading.

More on automobile supplier stocks:

• Seeking Alpha's Quant Ratings across the auto parts sector
• Aptiv notches record revenue in Q1, maintains full-year guide
• Gentex declares $0.12 dividend
• BorgWarner completes PHINIA spin-off

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