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Investing.com - Guggenheim raised its price target on BorgWarner (NYSE:BWA) to $39.00 from $37.00 on Thursday, while maintaining a Buy rating on the auto parts supplier. The stock, currently trading at $35.17, has shown resilience with an 11.4% gain year-to-date.
The research firm cited a valuation based on approximately 5.5x EV/EBITDA multiple on its 2025 estimates, which remains at a discount to the company’s 5-year average multiple of about 6.0x.
Guggenheim believes BorgWarner and other automotive suppliers should trade at a discount to their 5-year average multiples to reflect current automotive industry risks.
The firm specifically pointed to tariff-related light vehicle production uncertainty and a slowdown in electric vehicle production as factors warranting the continued discounted valuation.
Despite these industry headwinds, Guggenheim maintained its Buy recommendation on BorgWarner stock, suggesting confidence in the company’s positioning despite challenging automotive market conditions. According to InvestingPro, BorgWarner maintains strong financial health with a "GOOD" overall rating, and analysts expect net income growth this year. The company has also demonstrated stability through 13 consecutive years of dividend payments. For deeper insights into BWA’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
In other recent news, BorgWarner has reported strong financial results for the first quarter of 2025, with earnings per share (EPS) reaching $1.11, surpassing the forecasted $0.98. The company also exceeded revenue expectations, achieving $3.52 billion against the anticipated $3.41 billion. This positive performance is attributed to robust sales growth in electric vehicle components and strategic operational adjustments. Analysts at JPMorgan have responded by raising their price target for BorgWarner to $43.00, maintaining an Overweight rating, due to the company’s revenue and earnings before interest and taxes (EBIT) surpassing both JPMorgan’s and Bloomberg’s estimates. Meanwhile, TD Cowen has increased its price target to $33.00, citing BorgWarner’s strong first-quarter performance and optimistic guidance for 2025. BorgWarner’s strategic decisions, including exiting the charging business and consolidating battery systems, are expected to result in cost savings and improved earnings. These developments reflect BorgWarner’s efforts to navigate market challenges and capitalize on new business opportunities.
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