Goldman Sachs Sees 12% Downside in Lear (LEA) and Cuts Rating to 'Sell'
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(Updated - October 6, 2016 8:47 AM EDT)
Goldman Sachs downgraded Lear (NYSE: LEA) from Neutral to Sell with a price target of $107.00 (from $116.00), implying downside of 12%. Analyst David Tamberrino thinks the U.S. auto cycle peaked in 2015, and he said expectations for Lear are too high.
"While shares have been resilient vs. peers over the last 12-months, gaining 10.8% vs. our Autos coverage average decline of 0.1% and the S&P 500 +10.2% as the company has continued to beat and raise its own guidance multiple times, we believe both investor and Street consensus expectations have grown accustomed to the company’s achievable guidance outlook. As a result, we believe shares are more than fairly valued and could see a pullback on only achieving current earnings expectations," said Tamberrino.
"In addition, with the Johnson Controls Automotive business re-investing and increasing its bidding activity, we expect incremental competition to weigh on future new business awards. Lastly, being a commoditized segment, seating could see incremental pricing pressure in the later stages of the NA auto cycle," added the analyst.
Shares of Lear closed at $124.46 yesterday.
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Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS View, Analyst PT Change, Downgrades, Hot Downgrades
Related EntitiesGoldman Sachs, Standard & Poor's, Earnings
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