Wells Fargo Upgrades BorgWarner (BWA) to Outperform; Sell-Off Creates Nice Entry Point, In Our View

August 31, 2009 7:57 AM EDT

Wells Fargo upgrades BorgWarner (NYSE: BWA) to Outperform. Valuation Range: $39-$42 from $32-$34.

Wells analyst says, "We have upgraded BWA shares to Outperform and raised our valuation range. Since 7/24, the shares have significantly underperformed the market (-18.5% vs. +5.1% for the SPX) creating a nice entry point, in our opinion. While we have reduced our estimates for 2009 and 2010, the longer-term story remains intact. Street sentiment has recently turned negative because of expectations for an earnings miss in Q3. We believe Q3 forecasts will come down over the next few weeks, lowering the bar heading into October. Looking into 2010, European production could weaken, although we note BWA's mix should get better as most Euro scrappage programs will end in Dec (or potentially earlier). 3-yr backlog expectations are not high, creating potential for that data point to serve as a catalyst. We have reduced our 2009 EPS estimate to +$0.03 (from +$0.17) and our 2010 EPS estimate to $1.30 (from $1.45). We have introduced a 2011 EPS estimate of $2.35."

To see more analyst ratings on BWA Click Here.

BorgWarner Inc. engages in the manufacture and sale of engineered automotive systems and components primarily for power train applications worldwide.

Related Categories

Upgrades

Stocks Mentioned

Add Your Comment

Name

Subject

Body

Verification can't see the text?
click here to refresh the image.
what's this?