Jefferies Starts Lear (LEA) at Buy, For Investors With Automotive Benchmark Risk
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Price: $124.95 +1.88%
Rating Summary:
13 Buy, 16 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
13 Buy, 16 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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Jefferies initiates coverage on shares of Lear (NYSE: LEA) with a Buy rating and $123 price target. The firm states that company "offers an attractive means to participate in continued industry sales growth with below-average downside risk."
While the North American auto industry is the strongest that it's been in 15 years, Jefferies believes that trends are going to slow in some segments due to an increases in material costs, more normal launch costs levels, mix headwinds, due to more difficult comps as well as, rising oil prices, and capacity creep. They comment that at this time in the investment cycle, valuation will take a more prominent role in the search for alpha.
LEA’s post-bankruptcy discount has lingered because the stock was generally perceived as dead and boring due to their below-average opportunities for margin leverage and therefore less dramatic upward earnings revisions.
When looking into the futures, Jefferies feels that LEA represents an attractive catch-up trade if sales volumes surprise to the upside but industry-wide margin expansion decelerates.
The firm reports that they "think LEA would be particularly appealing to investors that have benchmark risk to the auto sector but which are leery of stepping into the group overall as the incremental buyer given that general industry margins are already at, or above, past peak levels."
For more ratings news on Lear click here and for the rating history of Lear click here.
Shares of Lear closed at $94.99 yesterday.
While the North American auto industry is the strongest that it's been in 15 years, Jefferies believes that trends are going to slow in some segments due to an increases in material costs, more normal launch costs levels, mix headwinds, due to more difficult comps as well as, rising oil prices, and capacity creep. They comment that at this time in the investment cycle, valuation will take a more prominent role in the search for alpha.
LEA’s post-bankruptcy discount has lingered because the stock was generally perceived as dead and boring due to their below-average opportunities for margin leverage and therefore less dramatic upward earnings revisions.
When looking into the futures, Jefferies feels that LEA represents an attractive catch-up trade if sales volumes surprise to the upside but industry-wide margin expansion decelerates.
The firm reports that they "think LEA would be particularly appealing to investors that have benchmark risk to the auto sector but which are leery of stepping into the group overall as the incremental buyer given that general industry margins are already at, or above, past peak levels."
For more ratings news on Lear click here and for the rating history of Lear click here.
Shares of Lear closed at $94.99 yesterday.
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