Credit Suisse's 4 Autos Picks Heading into Earnings

April 22, 2021 8:27 AM EDT
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Credit Suisse Autos analyst, Dan Levy, offered 4 names to focus on as Auto companies begin to report earnings, two positive and two negative. The two companies that he is most confided of beating earnings are General Motors (NYSE: GM) and Aptiv (NYSE: APTV) while he expects Adient (NYSE: ADNT) and Magna International (NYSE: MGA) to miss expectations:

GM: "While we saw negative revisions on estimates for GM truck (T1XX platform) and GMNA
production in recent months, and while GM will see a drag from higher commodity prices + EV
spend, we nevertheless believe GM can outperform driven by strength from pricing, GM
Financial, and China."

APTV: This is the analyst's top pick believing investors could see "solid growth-over-market in 1Q given automakers prioritizing high-mix vehicles (where APTV is overweight), and with GM ‘partially building’ some trucks (APTV would see revenue benefit from shipped parts, even if GM didn’t send the vehicles to dealers). Lastly, while the semiconductor issue was a drag on production, we don’t assume it to have been a drag on APTV input costs".

ADNT: "For F2Q’21, our EBITDA estimate of $224mn is below consensus $240mn. While we expect
ADNT to reaffirm its FY’21 guide (which it recently did at a conference last month), we believe
negative revisions to F-Series production in the quarter as well as the impact from higher
commodity prices with little in the way of near-term recoveries (i.e. foam shortage, rising steel
prices) could be drags on the results."

MGA: "For 1Q our EBIT estimate of $630mn is slightly below consensus $643mn. We could see
potential drags from negative end market revisions (especially in NA), as well as commodity cost
headwinds. That said, we could see an offset from MGA sales to ‘partially produced’ GM trucks,
which may not be reflected in production figures. Given elevated sentiment on MGA, we believe
any softness could be a negative catalyst for the stock".

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