Despite its stock’s strong performance thus far in 2021, Citi analyst Itay Michaeli continues to see a “favorable risk/reward” for Magna International Inc. , touting “a number of conceivable catalysts” with the development of electric and automated vehicles as well as advanced driver-assistance systems
In a research report released Friday, he raised his financial expectations for the Aurora, Ont.-based auto parts manufacturer after “strong” first quarter results, seeing evidence of ”solid” growth over market (GoM) and “rising EPS power.”
“We see two paths for further multiple expansion. The first is simply delivery of Magna’s FCF growth/conversion plan. The second, in our view, is to reposition the segments/story (including for a possible future spin) towards the increasingly important & unique role that Magna can play in AV/EV mobility scaling. This “two-entity” thesis is a way to perceive Magna in the context of Car of the Future investing,” said Mr. Michaeli.
Maintaining a “buy” rating, he hiked his target to US$116 from US$101. The average is US$103.78.
Others making target changes include:
* Scotia Capital’s Mark Neville to US$115 from US$105 with a “sector outperform” rating.
“We have increased our 2021/2022 estimates by approximately 10 per cent, despite current supply chain challenges (namely, the global chip shortage). While the situation is fluid and visibility limited, Magna (and the supply chain in general), in our opinion, has thus far navigated remarkably well,” said Mr. Neville.
* JP Morgan’s Ryan Brinkman to US$114 from US$110 with an “overweight” rating.