Al Root
BorgWarner caught an upgrade, and several other auto suppliers saw price target hikes as one Wall Street analyst got more bullish on the sector.
Wednesday, Baird's Luke Junk took his BorgWarner rating to Buy from Hold, and raised his price target on the stock to $52 a share from $41, for a few reasons.
"Cyclical leverage, hybrid [vehicle] exposure, and consistent execution are all positive," wrote Junk about Borg, who also increased price targets for several other Buy-rated stocks. "Factors backing our increasingly bullish posture include continued less-bad auto trends...intra-cycle [interest] rate cut leverage, and valuation that remains undemanding."
Car sales have been better than feared in the aftermath of President Donald Trump's sector tariffs. Solid new car sales and lower interest rates can help any auto parts stock. Junk took his Aptiv price target to $97 from $84. Visteon's target went to $144 from $130. His TE Connectivity target rose to $222 from $210. And his Bel Fuse target went to $154 from $130. All four stocks are rated Buy.
Aptiv, BorgWarner, and Visteon trade for an average of about 11 times estimated 2026 earnings. The S&P 500 trades for closer to 22 times. TE and Bel Fuse trade for just north of 20 times, but they have a lot of nonautomotive business that tends to be less cyclical and grow faster.
That valuation gap is one reason Aptiv is breaking apart into two companies: One company supplying electrical components and another supplying software and safety systems to multiple industries.
Barron's recently wrote positively about Aptiv stock, believing the coming breakup would unlock shareholder value. It's too early to tell how that call will turn out, but it's a good thing that price targets are moving higher. The alternative is for analysts to cut ratings when price targets are reached.
BorgWarner stock was up 1.3% in premarket trading at $43.20, while S&P 500 and Dow Jones Industrial Average futures were up 0.5% and flat, respectively. TE, Visteon, and Bel Fuse stocks were flat. Aptiv stock was down about 1%.
Overall, all five stocks are popular on Wall Street. The average Buy-rating ratio for the five is about 70%, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 55%.
Write to Al Root at allen.root@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
September 03, 2025 08:33 ET (12:33 GMT)
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