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On Thursday, Piper Sandler analyst Alexander Potter increased the price target for Aptiv PLC (NYSE:APTV) shares to $67 from the previous target of $65, while maintaining a Neutral rating on the stock. The adjustment follows the company’s recent decision to spin out its Electrical Distribution Systems (EDS) segment. According to InvestingPro data, Aptiv currently trades at an attractive P/E ratio of 9, with analyst targets ranging from $60 to $102.
Potter noted the spin-out, coupled with the company’s share buyback initiative, provided the necessary boost for Aptiv. The analyst believes these actions were beneficial, but he remains cautious about Aptiv’s outlook. Potter expressed concern that the company may be overly optimistic about its ability to capture value that typically belongs to its downstream customers, mainly automakers. The company maintains strong fundamentals with a healthy current ratio of 1.53 and generated $1.6 billion in free cash flow over the last twelve months.
Aptiv’s significant presence in Mexico, with over 30 factories, was also highlighted as a potential area of concern. Despite Aptiv’s ability to potentially pass on any tariff-related costs, Potter suggested that the current economic environment might lead investors to shy away from companies with substantial exposure to Mexico.
The revised price target of $67 is derived from a sum-of-the-parts valuation approach, which Potter considers the most appropriate method for a company in the process of restructuring itself. The increase in the target price is primarily attributed to a reduced share count, a result of Aptiv’s aggressive stock repurchase strategy.
In other recent news, Aptiv PLC has been the focus of multiple analyst upgrades and revised price targets. TD Cowen initiated coverage on Aptiv with a Buy rating and set a price target of $90, citing expectations for revenue growth and the anticipated Electrical Distribution Systems (EDS) business spinoff as key catalysts. RBC Capital Markets also raised its price target for Aptiv from $75 to $82, maintaining an Outperform rating. The firm noted the company’s impressive financial guidance for 2025 and the potential value unlocked by the EDS spinoff.
HSBC upgraded Aptiv’s stock rating from Hold to Buy, increasing the price target to $77, expressing optimism about the company’s growth prospects and the upcoming Auto division spinoff. Baird analysts followed suit, upgrading the stock to Outperform and raising the price target to $82, based on the anticipated benefits of the EDS spinoff and improved margin setup. These recent developments reflect a positive outlook from analysts on Aptiv’s strategic initiatives and growth trajectory.
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