UPDATE: J.P. Morgan Reiterates on Lear Corporation on Raised Margin Expectations

In a report published Monday, J.P. Morgan analyst Ryan Brinkman reiterated a Neutral rating on

, and raised the price target from $86.00 to $91.00. In the report, J.P. Morgan noted, “We raise our margin expectations for both LEA's Seating and Electrical businesses after each tracked stronger, the firm provided better than expected preliminary 2014 Seating guidance, and management spoke bullishly of the long-term potential for margins in its Electrical business. We move 2015 Seating margins to 6.3% from 5.9% prior and 2015 Electrical margins to 10.5% from 9.9% prior. This prompts positive revisions to our EPS estimates: 2013 goes to an above-guidance $5.87 from $5.72 prior; 2014 to $7.40 from $6.80; and 2015 to $8.40 from $8.00. Our price target, meanwhile, rises to $91 from $86, on our higher estimates. This is after LEA reported another quarter of solidly better results Friday, with EPS tracking at $1.45 vs. JPMe $1.38 and Bloomberg consensus of $1.33. The quarter was most notable for standout Electrical results, as has been the case for the past several quarters. Electrical revenue tracked in-line with our estimates, but margin performed much better, at 10.9% vs. JPMe 9.5%. Even adjusted for the lumpiness of favorable commercial settlements (a +50 bp benefit in the quarter), Electrical margins handily surpassed our estimates. The quarter was also noteworthy for preliminary 2014 Seating margin guidance of ~6% and long-run Electrical margin guidance of 9.5-10% vs. a clearly too conservative 8% prior. Guidance in both respects tracked better than expected.” Lear Corporation closed on Friday at $77.20.