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Investing.com - CFRA has raised its price target on Magna Int’l (NYSE:MGA) to $42.00 from $35.00 while maintaining a Hold rating on the stock. The auto components manufacturer, currently valued at $11.62 billion, appears undervalued according to InvestingPro’s Fair Value model.
The price target increase follows Magna’s second-quarter earnings beat and the company’s decision to raise its guidance for 2025. CFRA has also increased its adjusted earnings per share estimates to $4.90 from $4.40 for 2025 and to $5.60 from $5.40 for 2026.
The research firm based its new target on a 2026 price-to-earnings ratio of 7.5x, which represents a discount to the stock’s 10-year average forward P/E of 10.7x. The stock currently trades at a P/E of 9.67x, with InvestingPro analysis revealing 8+ additional valuation metrics and insights available to subscribers. CFRA noted that while Magna’s recent results were "a step in the right direction," the company has only beaten bottom-line expectations twice in the past seven quarters.
CFRA expressed caution about Magna’s extensive global footprint, which includes manufacturing facilities and operations in 28 countries as of year-end 2024. This widespread presence makes the company "more vulnerable to tariffs than other auto suppliers," according to the research firm.
The firm also pointed out that Magna did not repurchase any stock during the second quarter and that its cash returns to shareholders lag behind those of competitors, though InvestingPro data shows the company has maintained dividend payments for 34 consecutive years with a current yield of 4.68%. CFRA indicated it prefers auto suppliers with greater exposure to faster-growing market segments and less globalized operations, particularly given Magna’s modest gross profit margin of 13.83%.
In other recent news, Magna International ’s earnings report was deemed largely in line by BMO Capital, leading the firm to raise its price target for the company to $47 from $46 while maintaining an Outperform rating. This adjustment follows a period of mixed results and guidance cuts for Magna. Additionally, Magna is partnering with Waymo to establish a new autonomous vehicle factory in Metro Phoenix. This facility will produce thousands of Jaguar I-PACEs equipped with Waymo’s fully autonomous technology. The 239,000 square foot factory represents a significant investment and has already created hundreds of jobs in Mesa, Arizona. Waymo plans to expand its fleet with 2,000 new robotaxis by 2026, enhancing its service in several major U.S. cities. This collaboration highlights Magna’s involvement in the growing autonomous vehicle market.
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