Lear stock price target raised to $136 from $123 at Citi on auto trends

Investing.com - Citi has raised its price target on Lear (NYSE:LEA) to $136.00 from $123.00 while maintaining a Buy rating on the auto parts supplier. Currently trading at $94.34, InvestingPro analysis suggests the stock is undervalued, with a P/E ratio of 10.89x.

The firm cited improving industry trends that could particularly benefit automotive suppliers following a period of tariff-related uncertainty that created an overhang during first-quarter earnings season, when many companies pulled guidance and offered cautious outlooks. As a prominent player in the Automobile Components industry with $22.87 billion in revenue, Lear has maintained profitability with earnings per share of $8.59.

Since that cautious period, Citi noted that adjustments for tariff implementation have been made while demand has exceeded expectations, with production estimates moving higher across all key regions, increasing the likelihood for a positive second-quarter earnings season and upward revisions to assumptions.

The research firm believes that initial concerns about "Liberation Day" impacts were overly cautious, with both demand and production performing better than expected and additional upside potential in the second half of the year.

Citi also highlighted that industry production relative to plan has been steadily improving, allowing productivity initiatives to positively impact performance, leading the firm to increase its earnings assumptions for Lear for both 2025 and 2026.

In other recent news, Lear Corporation reported its financial results for the first quarter of 2025, surpassing analyst expectations. The company achieved an earnings per share (EPS) of $3.12, exceeding the forecast of $2.70, and posted revenues of $5.6 billion, slightly above the anticipated $5.51 billion. Despite these positive outcomes, Lear’s revenue still represented a 7% decline year-over-year. The company also withdrew its full-year guidance, citing uncertainties related to trade policies and potential tariff impacts. Lear achieved significant cost savings through restructuring and automation, securing $750 million in new business, marking a record in over a decade. The company’s strategic investments and operational improvements have contributed to its strong performance amidst a challenging market environment. Additionally, Lear is exploring options to mitigate tariff-related risks and has expressed confidence in recovering associated costs from customers. The company plans to provide further clarity at an upcoming investor conference in June.

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