UBS on U.S. Auto Company Pensions: Funding Improves (F, GM, GT, MTOR, AXL, FMAL, JCI)
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Rating Summary:
12 Buy, 23 Hold, 4 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 7 | Down: 5 | New: 25
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UBS on U.S. Auto Company Pensions: Funding Improves
Analyst, Colin Langan, said, "After declining through 2012, the benchmark pension discount rate has recovered recently, now down a modest 15 bps YTD. With the S&P 500 up ~13% and bond returns of ~3%, plan asset returns are +7% YTD, slightly below the companies’ return assumptions. Planned 2012 contributions should offset the above factors; therefore we forecast improved pension funding & slightly lower pension expense."
New rules on pension funding provide relief for large unfunded plan. Coling believes Ford (NYSE: F), Goodyear (NYSE: GT), Meritor (Nasdaq: MTOR), American Axle (NYSE: AXL) and Federal Mogul (Nasdaq: FMAL)
Overall, Langan expects pensions to be a headwind/tailwind for certain companies including: 1) GM (NYSE: GM) seeing about $0.05 headwind in EPS from 2013-15. Price Target lowered by $1 to $29; 2) Strong tailwinds in Johnson Controls (NYSE: JCI) and MTOR.
UBS maintains a 'Buy' rating on GM and Ford.
Analyst, Colin Langan, said, "After declining through 2012, the benchmark pension discount rate has recovered recently, now down a modest 15 bps YTD. With the S&P 500 up ~13% and bond returns of ~3%, plan asset returns are +7% YTD, slightly below the companies’ return assumptions. Planned 2012 contributions should offset the above factors; therefore we forecast improved pension funding & slightly lower pension expense."
New rules on pension funding provide relief for large unfunded plan. Coling believes Ford (NYSE: F), Goodyear (NYSE: GT), Meritor (Nasdaq: MTOR), American Axle (NYSE: AXL) and Federal Mogul (Nasdaq: FMAL)
Overall, Langan expects pensions to be a headwind/tailwind for certain companies including: 1) GM (NYSE: GM) seeing about $0.05 headwind in EPS from 2013-15. Price Target lowered by $1 to $29; 2) Strong tailwinds in Johnson Controls (NYSE: JCI) and MTOR.
UBS maintains a 'Buy' rating on GM and Ford.
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