UBS on U.S. Autos and Auto Parts: Reducing Estimates on Euro Depreciation

June 20, 2012 12:46 PM EDT Send to a Friend
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UBS on U.S. Autos and Auto Parts: Reducing Estimates on Euro Depreciation

Analyst, Colin Langan, said, "The EUR/USD rate has fallen 3% from the start of the year and 6% from the end of Q1. For companies with profitable European operations, this presents a sales and EPS headwind. We are therefore updating our sales and EPS estimates to reflect our revised 2012 fx assumption of 1.27 (vs. 1.33 prior). Suppliers with the largest European exposure include Harman (NYSE: HAR), WABCO (NYSE: WBC), BorgWarner (NYSE: BWA), TRW (NYSE: TRW), Delphi (Nasdaq: DLPH), and Gentex (Nasdaq: GNTX). Most of these names have underperformed over the last month, and therefore we believe most of this risk is priced in."

Langan lowers estimates on U.S. Suppliers, saying BWA, Lear (NYSE: LEA), Visteon Corp (NYSE: VC) and Johnson Controls (NYSE: JCI().

As for GM (NYSE: GM) and Ford (NYSE: F), they are both expected to lose money in Europe this year, but FX change would reduce the losses by less than $50 million. UBS maintains its estimates on GM and Ford. Langan maintains a 'Buy' rating on F, VC, LEA, GM and Dana (NYSE: DAN)


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