Baird analysts remain buyers of auto stocks as the brokerage believes valuations discount a cyclical decline in demand whereas
evidence points to stability (United States) or additional growth (Europe/China) around the world.
The August auto sales finished at 17.0-million-unit SAAR, slightly below 17.2-million-unit consensus but firmly within the
16.5–18.0-million-unit range observed for nearly two years. In terms of units, sales fell 4 percent on continued car weakness (-14
percent year-over-year) partially offset by strength in trucks (+4 percent year-over-year).
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Most of the U.S. automakers reported a drop in sales volume in August.
-
General Motors Company (NYSE: GM) reported
5 percent drop in sales.
-
Ford Motor Company (NYSE: F) suffered 8.4
percent fall in sales.
-
Toyota Motor Corp (ADR) (NYSE: TM) revealed
5 percent decline in sales.
On the other hand, sales of Fiat Chrysler Automobiles NV (NYSE: FCAU) rose 3 percent.
"The US appears to be plateauing at very high levels which we believe can be sustained given current positive fundamentals,"
analyst David Leiker wrote in a note.
Meanwhile, the debate on U.S. autos and the state of the cycle has put pressure on supplier stocks.
"Instead of a scenario of either 'peak' or 'recession' with no in-between, performance in 2016 (and, for that matter, since late
2014) supports the market sustaining very high levels of demand given ongoing consumer health: employment, income, confidence, and
credit availability all supportive," Leiker noted.
Leiker sees 2–3 percent global demand growth and content gains to support mid-single-digit organic revenue growth and
double-digit earnings growth across the suppliers.
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Latest Ratings for F
Date |
Firm |
Action |
From |
To |
Aug 2016 |
Seaport Global |
Initiates Coverage on |
|
Buy |
Aug 2016 |
Jefferies |
Initiates Coverage on |
|
Underperform |
Jul 2016 |
JP Morgan |
Maintains |
|
Overweight |
View More Analyst Ratings for
F
View the Latest Analyst Ratings
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