FXEMPIRE
All
Ad
Corona Virus
Stay Safe, FollowGuidance
World
41,040,619Confirmed
1,129,591Deaths
30,625,859Recovered
Fetching Location Data…
Advertisement
Advertisement
Vivek Kumar
Cars sale

Aptiv PLC‘s price target was raised to $150 from $63 with ‘Overweight’ stock rating, according to Morgan Stanley equity analyst Adam Jonas, who said that after coming out of the COVID-19 era, Aptiv’s portfolio is on the verge of a transformation that will alter the stock’s narrative, driving a multiple re-rating.

In July, the Jersey-registered auto parts company reported a second-quarter 2020 U.S. GAAP loss of $1.43 per diluted share. Excluding special items, the second-quarter loss totalled $1.10 per diluted share.

These results include the adverse impacts of global vehicle production declines of 45% in the second quarter, largely resulting from the ongoing impacts of the novel coronavirus pandemic.

“We think the rapidly changing mix of key revenue drivers of Aptiv lends itself to a change of divisional reporting structure. We believe the way Aptiv currently reports via two segments does not sufficiently capture the specific drivers of secular growth. Our bull case valuation of $225 assumes that the ADAS business is valued similar to the Mobileye acquisition multiple, Other User Experience segment is valued at 20x EBITDA and the BEV Power & Signal business and Mobility & Services are valued at strategic multiples,” Morgan Stanley’s Adam Jonas said.

“We argue investors will need to think out three to five or even five to 10 years in their DCF models to fully capture the compounding growth opportunity embedded in Aptiv.”

Aptiv stock rose about 4% to $86.30 in pre-market trading on Friday; however, the stock is down over 12% so far this year.

Several other equity analysts have also updated their stock outlook. Evercore ISI raised price target to $110 from $85; UBS upped their target price to $100 from $86; Citigroup increased their price target to $95 from $84 and Credit Suisse raised target price to $91 from $88. Oppenheimer raised price target to $95 from $83; Deutsche Bank lowered their target price to $91 from $93; RBC cuts target price to $92 from $94; Jefferies raised target price to $96 from $79 and JP Morgan upped their target price to $89 from $73.

Nine analysts forecast the average price in 12 months at $89.11 with a high forecast of $110.00 and a low forecast of $63.00. The average price target represents a 6.99% increase from the last price of $83.29. From those nine equity analysts, seven rated ‘Buy’, two rated ‘Hold’ and none rated ‘Sell’, according to Tipranks.

“+6% to +8% growth over market is best in class, with exposure to secular narratives around electric & autonomous vehicles. For electric vehicles, the Signal & Power Solutions business is growing +4% to +6% growth over market, with a favorable mix of Electrical Distribution Systems vs. Engineered Components,” Morgan Stanley’s Adam Jonas added.

“For active safety, based on the bookings, Aptiv is on track to be the industry leader in Active Safety. For autonomous vehicles, Aptiv has the world’s largest autonomous commercial mobility service in Las Vegas, with operations in Boston, Pittsburgh, Shanghai, and Singapore.”

Morgan Stanley highlighted electric vehicle penetration, active safety penetration and spin of signal & power or user experience as major upside risks to the stock.

However, Morgan Stanley’s gave a stock price forecast of $60 under the worst-case scenario.

“Where could we be wrong? the market may be reluctant to re-rate Aptiv higher as it may still view Aptiv through the lens of an auto supplier and may not rate its potential future recurring revenues, or ascribe premium valuations to its electric vehicle/automated vehicle (EV/AV) expertise and IP until further progress is demonstrated,” Jonas said.

“Further, Aptiv may not realize its targeted above-market growth and its backlog may not materialize into revenues. Ultimately the company is exposed to auto industry production and could be affected by a myriad of manufacturing issues as well as a loss of market share in AV/EV leadership to other competitors.”

Check out FX Empire’s earnings calendar

Advertisement
Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Trade With A Regulated Broker

  • Your capital is at risk
IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US