Magna Int'l (MGA) PT Lowered to $49 at Scotiabank

Scotiabank analyst Jonathan Goldman lowered the price target on Magna Int'l (NYSE: MGA) to $49.00 (from $52.00) while maintaining a Sector Perform rating.

The analyst commented: "Slightly ahead for 4Q & 2025. Free option on self-help initiatives. The bar for 4Q is low with consensus sitting 3% below the implied guide; we are at the low-end. For 2025, we are thinking: low-end of 2024 EBIT guidance range of $2,275 million + balance of operational excellence initiatives (75 bp margin expansion over two years) ~$160, which gets us to $2,435 million, or ~3% above consensus. Our estimates bake-in flat LVP in NA and Europe. Magna has positively surprised us numerous times over the past year with its ability to reduce costs and capex more than previously guided. Recall, the company cut megatrend engineering spend by $50 million in 1Q and another $40 million in 2Q; while it cut capex by $50 million in 1Q, a further $100 million in 2Q, and a further $100 million. In aggregate, we estimate these initiatives improved FCF by $320 million YTD. The company repurchased ~5.1 million shares, or 1.7% of s/o, since 3Q reporting, Recall, in 3Q the company initiated the NCIB a couple of quarters earlier than anticipated, which it expects to max out. Shares trade at 4.8x EV/EBITDA on our 2025E compared to the three-year average of 5.2x. On a FCF basis, shares trade at a 12.6% yield on our 2025E."

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