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On Thursday, TD Cowen analysts increased the price target for BorgWarner shares, traded on the New York Stock Exchange (NYSE:BWA), from $30.00 to $33.00, while maintaining a Hold rating. The upward adjustment follows BorgWarner’s robust first-quarter performance, reassuring guidance for 2025, and the announcement of significant new business gains. According to InvestingPro data, the company maintains strong financial health with a "GOOD" overall rating, and analysis suggests the stock is currently undervalued relative to its Fair Value.
BorgWarner reported a strong first quarter and provided an updated guidance for 2025 that may still be conservative, particularly regarding the company’s auto production assumptions. In response to these developments, TD Cowen has revised its estimates higher. The analysts emphasized the company’s solid quarterly results and the updated 2025 guidance as the reasons for increasing their estimates. The company’s financial strength is evidenced by its robust current ratio of 1.79 and consistent dividend payments maintained for 13 consecutive years, as reported by InvestingPro.
The firm’s 2025 estimated Earnings Before Interest and Taxes (EBIT) now sits at the midpoint of BorgWarner’s guided range. Additionally, TD Cowen has modestly raised the target multiples, with the 2025 estimated Enterprise Value/EBITDA (EV/EBITDA) ratio going up to 4.5 times from the previous 4.25 times, and the Price/Earnings (P/E) ratio increasing to 8.0 times from 7.5 times. These adjustments reflect the company’s encouraging new business wins and its resilient performance.
The analyst’s commentary highlighted that while they are fundamentally constructive on BorgWarner’s outlook, they seek better visibility on the company’s medium-term outgrowth prospects before changing their rating. The revised price target to $33 from $30 reflects the stronger first-quarter results and the updated guidance, alongside the company’s promising new business achievements.
In other recent news, BorgWarner Inc. reported a strong financial performance for the first quarter of 2025, exceeding analyst expectations. The company posted an earnings per share (EPS) of $1.11, surpassing the projected $0.98, and reported revenue of $3.52 billion, which was higher than the anticipated $3.41 billion. This robust performance was attributed to significant growth in electric vehicle component sales and strategic operational adjustments. JPMorgan responded to these results by raising its price target for BorgWarner stock to $43, maintaining an Overweight rating due to the company’s strong first-quarter earnings and revenue figures. BorgWarner’s management also announced a strategic decision to exit the charging business, citing challenging market conditions in North America and Europe. This move is expected to create a $30 million sales headwind but a $15 million EBIT benefit by 2025. Additionally, the company plans to consolidate its battery systems business into a single facility, projecting cost savings of $10 million in 2025 and $20 million in 2026. BorgWarner has provided full-year sales guidance of $13.6 billion to $14.2 billion and anticipates adjusted EPS between $4.00 and $4.45.
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