Jefferies Starts BorgWarner (BWA) at Hold, Best Long-Term Growth Story

Jefferies initiates coverage on shares of BorgWarner (NYSE: BWA) with a Hold rating and $81 price target, which the Hold rating is due to their valuation as they view BWA as one of the best long-term growth stories in their coverage.

The company's products are technologically differentiated, and contribute to improved fuel efficiency and reduced emissions, which has turned into revenue growth in excess of industry unit volume growth and strong margins. The firm believes that BWA's recent guidance increase in margins to 10.5%+ is still conservative.

The firm reports that, "BWA’s three-year new business backlog supports top-line growth of 10pp better than industry production with double-digit-type margins. We expect this to drive EBIT margin expansion of 210bps and 70bps in 2011e and 2012e, respectively, compared to our automotive supplier average of 80bps and 50bps."

For more ratings news on BorgWarner click here and for the rating history of BorgWarner click here.

Shares of BorgWarner closed at $73.67 yesterday.

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