UBS Downgrades BorgWarner (BWA) to Sell

UBS analyst Joseph Spak downgraded BorgWarner (NYSE: BWA) from Neutral to Sell with a price target of $55.00 (from $49.00).

The analyst comments: "We are downgrading BWA to Sell, $55 PT believing an optimistic case for their new data center power generation opportunity is priced in. To be clear, we applaud BWA for seeking out new growth opportunities, especially in the face of organic declines in their traditional Foundational/eProducts business (-1% in 2026E) and another ~$210mm decline (-1.5%) from their Battery business. The potential for $300mm in 2027 TurboCell sales helps backfill that growth. With 2GW of initial capacity there is also potential for further growth. BWA hasn't provided hard details on price and ramp so we need to make a number of assumptions. But we believe the bull case assumes fully scaled $1.5bn in sales by 2030. We expect a slower ramp to half that level. Further, even if the bull case is correct, we believe ~50% of the upside has already been priced in. The remaining upside could be another ~10% to the stock but that isn't attractive to us on a risk adjusted basis considering that assumes perfect execution and we see some areas of concern/risk for a slower ramp. Simply put, we like the strategy but struggle to defend the recent move. We provide a number of sensitivities as to what an investor would have to believe to underwrite adding to the stock at current levels."

For an analyst ratings summary and ratings history on BorgWarner click here. For more ratings news on BorgWarner click here.

Shares of BorgWarner closed at $60.31 yesterday.

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