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Guggenheim has upgraded BorgWarner (NYSE:BWA) to buy from neutral after what it calls “unjustified post earnings weakness.”
The firm’s new price target is $41 (~20% upside based on Wednesday’s close).
Analyst Ali Faghri said that the market fundamentally has electric vehicle risks associated with the company wrong. He added that in the long term, BorgWarner (BWA) is making advances in electrification, thanks to an attractive customer mix.
“While BWA lowered the mid-term eProducts guide, our analysis of emissions regulations shows that increased hybrid content will likely be needed to offset any pure battery electric downside, and is likely to become a source of potential upside revisions over the next 12-18 months,” Faghri wrote.
Based on Guggenheim estimates, he noted that BorgWarner does business with seven of the top 10 global EV original equipment manufacturers and OEMs that make up more than 70% of the China NEV market.
Faghri also called BorgWarner’s (BWA) currently valuation “compelling,” adding it makes a “strong late cycle automotive investment.”