ADNT - Auto suppliers sized up by Morgan Stanley for EV shift implications

Morgan Stanley forecasts electric vehicles to grow at a CAGR of positive 28% through 20203 off the pre-COVID base, while ICE vehicle sales are forecast to see a CAGR drop of 3%. "The roughly 30% gap in underlying market growth rates, when compounded over several years, has the potential to create some substantial disparities in supplier revenue growth and operating performance that may not be fully reflected in current share prices," notes analyst Adam Jonas.Jonas and team have done some resetting of ratings and price targets within the auto supplier sector based off the new EV mix. Adient (ADNT) (Equal-weight, price target up to $26 from $15): "EW on 5% upside and balanced bull/bear. Self-help potential in seating margins balanced by high financial leverage. Limited upside to fair value and a balanced risk-reward skew."American Axle & Manufacturing (AXL) (Equal-weight, price target to $8 from $4.): "We are EW despite 12%

For further details see:

Auto suppliers sized up by Morgan Stanley for EV shift implications