Post by
zack50 on May 07, 2021 10:49pm
In a research note, Raymond James analyst Michael Glen said:
“Martinrea remains a deep-value stock, in our view, and we continue to see some constructive developments within the business. In that regard, although near-term results are being tempered by ongoing launch and investment activity, management has now offered explicit 2023 guidance which calls for sales of $4.6-4.8-billion, an operating margin of 8 per cent, and free-cash flow of $200-million.
These are clearly aggressive targets for the business, and we can say quite clearly that once investors are able to gain increased visibility on such an outcome (say by mid 2022), we believe the stock will be valued much higher than it is currently.
In the interim however, the business is working through a number of launches, ongoing integration work with respect to the Metals acquisition, and supply chain disruptions related to chip shortages. On the chip shortage in particular, there continues to be conflicting accounts as to how it will impact production volume through the balance of the year, and we anticipate it will become a much larger investor focal point in coming months for the industry as a whole.
Martinrea was fairly clear that there will be disruption to take place in 2Q (similar in scale to 1Q), specifically highlighting the impacts being felt on the Ford Escape and Chevrolet Equinox programs.”