BorgWarner Secures Multiple Contracts, Stock Hits Record High
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 4 days ago
0mins
Should l Buy BWA?
Source: seekingalpha
- Contract Announcements: BorgWarner secured multiple contracts with North American and European OEMs, including its first 48V electric cross differential program, which is expected to drive profitable growth in 2027 and enhance market competitiveness.
- Earnings Beat: The company reported an adjusted profit of $4.91 per share for the fourth quarter, a 14% increase year-over-year, primarily due to share repurchases and higher adjusted operating income, indicating strong profitability.
- Sales Growth: Sales increased by 3.9% to $3.57 billion, exceeding expectations by $40 million, reflecting robust growth in light vehicle eProduct sales that helped offset lower volumes in the Battery & Charging Systems segment.
- Outlook: Despite the company projecting full-year earnings between $4.74 and $4.91 per share, which is below market expectations, and revenue guidance of $14 billion to $14.3 billion, BorgWarner's stock rose by 27% on Wednesday, demonstrating market confidence in its long-term growth potential.
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Analyst Views on BWA
Wall Street analysts forecast BWA stock price to fall
8 Analyst Rating
5 Buy
3 Hold
0 Sell
Moderate Buy
Current: 66.550
Low
45.00
Averages
51.50
High
55.00
Current: 66.550
Low
45.00
Averages
51.50
High
55.00
About BWA
BorgWarner Inc. is engaged in clean technology solutions for combustion, hybrid and electric vehicles. The Company operates in four segments. The Turbos & Thermal Technologies’ technologies include turbochargers, e-boosters, e-turbos, emissions systems, thermal systems, gasoline ignition technology, smart remote actuators, powertrain sensors, among others. The Drivetrain & Morse Systems segment’s products include control modules, friction and mechanical clutch products for automatic transmissions, torque-management products and rear-wheel drive (RWD) and all-wheel drive (AWD) transfer case systems and coupling systems. The PowerDrive Systems segment’s products include power electronics such as inverters, onboard chargers, DC/DC converters and combination boxes, and others. The Battery & Charging Systems segment’s products include lithium-ion battery systems for electrified bus, truck and off-highway applications and DC fast chargers suitable for all types of electric vehicles.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Smurfit WestRock's Recovery: Smurfit WestRock (NYSE:SW) experienced a 16.81% rise this week after releasing fourth-quarter results, with multiple analysts raising their price forecasts, demonstrating market confidence in its future performance.
See More
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- Stock Price Upside: Following a more than 22% surge on Wednesday, Wall Street analysts believe BorgWarner's shares still have room to run, primarily driven by a deal with TurboCell to supply turbine generator systems for AI data centers, marking a strategic pivot towards the AI-driven economy.
- Rating Upgrade: Deutsche Bank upgraded BorgWarner's rating from neutral to buy with a price target of $82, indicating a potential 24% upside from Wednesday's close, with analyst Edison Yu highlighting that the agreement is expected to generate over $300 million in revenue by 2027, showcasing significant revenue potential.
- Long-term Revenue Opportunity: Yu estimates that if BorgWarner fully engages in the deployment, the revenue opportunity could reach $1.5 to $2.0 billion over multiple years, representing a substantial tailwind for growth and reflecting positive market sentiment towards the company's transformation.
- Cautious Market Share Outlook: Morgan Stanley maintained an equal weight rating on BorgWarner but raised its price target from $49 to $60, indicating a potential loss from Wednesday's close; analyst Andrew Percoco cautioned that new technology validation may take years, suggesting a prudent assumption of low single-digit market share.
See More
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- Strategic Market Shift: BorgWarner's entry into the AI data center market signifies a pivotal transition from a traditional Tier-1 powertrain supplier to a diversified industrial entity, which is expected to significantly enhance its competitive position in the market.
- New Partnership Agreements: The company has signed a series of new agreements with European and North American OEMs, including its first 48V electro cross differential program and a supply agreement for a turbine generator system, anticipating to control at least two-thirds of the system content, further solidifying its market position.
- Profit Growth Potential: CEO Joseph Fadool expects the turbine generator system to meet the power quality and energy needs of the data center market, opening avenues for further profitable growth, particularly driven by the expansion of AI and cloud computing.
- Target Price Upgrade: Deutsche Bank upgraded BorgWarner's rating from Hold to Buy and raised its target price by 78% to $82, indicating a 24% upside from Wednesday's closing price, reflecting market optimism about its future growth prospects.
See More
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- Apple Siri Upgrade Delay: Evercore ISI reiterates Apple as outperform, suggesting that reports of delays in Siri upgrades are overstated, with expectations for a multi-phase rollout of AI features this year, emphasizing the importance of privacy protection and seamless integration.
- Shopify Attractiveness Upgrade: TD Cowen upgrades Shopify from hold to buy, citing its strong quarterly performance and continued growth momentum as compelling reasons for investors to consider the stock, especially given its recent price decline.
- Fastly's Stellar Performance: William Blair upgrades Fastly from market perform to outperform following impressive earnings, driven by a significant increase in AI traffic contributions, indicating substantial growth potential in this emerging sector.
- MercadoLibre's Improved Competitive Landscape: JPMorgan upgrades MercadoLibre from neutral to overweight, noting a reduction in competitive pressures in the Latin American online marketplace, with expectations for sustained growth in the coming quarters.
See More
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- Analyst Rating Changes: Top Wall Street analysts have adjusted their ratings on several companies, reflecting varying market perspectives that could influence investor decisions.
- Overview of Updates: The rating changes include upgrades, downgrades, and new initiations, prompting investors to pay attention to these shifts to stay informed about market dynamics.
- Investor Consideration: Investors considering buying SHOP stock should refer to the latest insights from analysts to make more informed investment decisions, especially amid market volatility.
- Data Source: A complete view of all analyst rating changes can be found on Benzinga's analyst ratings page, ensuring investors have access to the latest information to optimize their investment strategies.
See More
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- Analyst Rating Changes: Top Wall Street analysts have adjusted their ratings on several companies, indicating a shift in market sentiment that could influence investor decisions and market trends.
- Upgrades and Downgrades: While specific upgrades and downgrades are not detailed, such changes typically have a direct impact on the stock prices of the affected companies, prompting investors to closely monitor these shifts to optimize their portfolios.
- Market Reaction Expectations: The adjustments in analyst ratings may trigger short-term market volatility, particularly when investor sentiment is sensitive to certain stocks, potentially leading to rapid price increases or decreases.
- Impact on Investor Decisions: As analysts revise their views on stocks, investors may reassess their investment strategies when considering buying or holding these stocks, thereby affecting overall market liquidity.
See More
