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On Thursday, BMO Capital Markets adjusted its price target on Linamar Corp (TSX:LNR:CN) (OTC: LIMAF), a leading manufacturer of precision automotive components, lowering it to Cdn$65.00 from the previous Cdn$75.00. Despite this change, the firm maintained its Outperform rating on the company’s stock.
The reduction in the price target comes alongside Linamar’s latest earnings and future outlook. The company has indicated that, currently, there are no discussions among Original Equipment Manufacturers (OEMs) about significantly shifting production between countries. This suggests a stable production environment for Linamar in the near term.
BMO Capital’s analyst highlighted that Linamar’s 2025 outlook for its Mobility division is more positive than initially anticipated, with the expectation that the company can control the primary factors driving its success. However, the outlook for the Industrial division has been downgraded, aligning with BMO’s previous estimates.
The stock is currently perceived as undervalued, trading at approximately 2.5 times the firm’s revised 2025 Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) estimates. This is lower than the historical average of 3 to 4.5 times EBITDA. The analyst suggests that the stock will likely maintain its current valuation until uncertainties surrounding tariffs are fully addressed.
BMO Capital has adjusted its valuation multiple to 3 times from 3.5 times its estimated 2025 EBITDA, leading to the new price target of Cdn$65.00. This revision reflects a cautious but optimistic view of Linamar’s future financial performance amidst a challenging global trade environment.
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