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AUBURN HILLS, Mich. - BorgWarner (NYSE: BWA), a global product leader in clean and efficient technology solutions for combustion, hybrid, and electric vehicles, with a market capitalization of $6.47 billion and annual revenue of $14.09 billion, has announced the extension of its partnership with a German OEM and a new contract with a Chinese transmission manufacturer. According to InvestingPro analysis, the company maintains strong financial health with liquid assets exceeding short-term obligations. The company’s advanced dual-clutch modules will be utilized in a range of vehicles, including SUVs and sedans, for the Chinese and export markets.
The seven-year extension with the German OEM in China is a continuation of a decade-long collaboration, highlighting BorgWarner’s expertise in dual-clutch transmission (DCT) technology. The company’s robust financial position is reflected in its ability to cover interest payments through cash flows, while maintaining dividend payments for 13 consecutive years. The DCT clutch assembly, produced at the company’s Tianjin facility, is recognized for reducing rotational inertia and minimizing friction losses, which leads to decreased drag torque and improved transmission efficiency. These advancements contribute to a smoother driving experience and are applicable to both traditional internal combustion engine vehicles and mild hybrid models.
In addition to the extended partnership, BorgWarner has secured a new program with a prominent transmission manufacturer for a leading Chinese OEM. The clutch module, slated for production in BorgWarner’s Taicang facility, boasts a compact design, superior thermal robustness, and cost-effectiveness. These features are expected to deliver benefits such as smooth shifting, excellent hill-start capability, and optimal racing starts. Mass production for this new contract is scheduled to begin by the end of 2025.
BorgWarner’s commitment to innovation in the automotive industry remains strong as they continue to refine their wet DCT technology. This recent expansion in China emphasizes the company’s dedication to supporting customer growth in the region and succeeding in international markets. Trading at $29.45, InvestingPro’s Fair Value analysis suggests the stock is currently undervalued. For deeper insights into BorgWarner’s financial health and growth prospects, including 8 additional ProTips and comprehensive analysis, check out the full research report on InvestingPro.
Vice President of BorgWarner Inc. and President and General Manager, Drivetrain and Morse Systems, Isabelle McKenzie, stated their success in securing new projects demonstrates their commitment to delivering innovative solutions in China.
The information for this article is based on a press release statement from BorgWarner.
In other recent news, BorgWarner reported fourth-quarter earnings that exceeded analyst expectations, with adjusted earnings per share (EPS) of $1.01, surpassing the consensus estimate of $0.96. However, the company’s revenue fell slightly short, coming in at $3.44 billion against the expected $3.43 billion, representing a 2% decrease. Looking ahead to 2025, BorgWarner provided an EPS guidance range of $4.05 to $4.40, which falls below the analyst consensus of $4.23. The company also anticipates revenue between $13.4 billion and $14 billion, which is less than the consensus projection of $14.12 billion.
Goldman Sachs recently upgraded BorgWarner’s stock rating from Neutral to Buy, raising the price target to $34 from $31. This upgrade reflects BorgWarner’s strategic positioning in the market and its significant sales exposure to the Chinese market. On the other hand, CFRA adjusted its 12-month price target for BorgWarner to $32 from $35, maintaining a Hold rating. CFRA’s analysis cited potential challenges such as a slowdown in electric vehicle demand growth and the elimination of the federal electric vehicle tax credit.
Despite these mixed signals, BorgWarner continues to secure new business awards, including Variable Cam Timing systems and turbocharger program extensions. These developments are expected to support the company’s long-term growth. BorgWarner’s diversified product offerings for all powertrain types, including hybrid and internal combustion engine products, position it well in the evolving automotive industry.
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