Deutsche Bank Upgrades American Axle (AXL) and Dana to (DAN) Buy
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Deutsche Bank upgraded American Axle (NYSE: AXL) from Hold to Buy with a price target of $20. Dana Holdings (NYSE: DAN) was also upgraded to Buy with a price target of $20.
Analyst Rod Lache thinks Washington will be the game changer for U.S. Autos, as prospects for tax reform/stimulus, trade and auto specific regulations are more favorable than anticipated.
Lache explained, "While it’s too early to assess specific proposals, we noted broad conviction that a variety of pro-growth changes are likely. DB’s economists believe that these can drive significant GDP acceleration. From an Auto Investor’s perspective this could be a 'Game Changer'. Cyclicality represents the single biggest risk when investing in Autos. While we continue to acknowledge a number of significant headwinds, we believe that the potential for near term cyclical downside has diminished."
The analyst added, "Tax Reform and Fiscal Stimulus through Infrastructure Spending are the clear priorities, and we believe that these could move the needle for U.S. GDP growth. On Trade, we believe that Investors fears about protectionism/tariffs are overblown. Our impression is that the incoming Administration appears to be looking at tweaks and fine-tuning, not significant changes to tariffs. In addition, key regulatory drivers of supplier growth (i.e. fuel efficiency, active safety) are likely to remain intact. Active safety may even get a boost."
Shares of American Axle closed at $15.66 yesterday.
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