UPDATE: Morgan Stanley on TRW Automotive: Cautious on European Recovery, But Tailwinds Will Be Significant
In a report published Tuesday, Morgan Stanley analyst Adam Jonas Maintained an Overweight rating on TRW Automotive Holdings Corp. (NYSE: TRW), saying Europe op. leveraged coil and ready to spring.
According to the report, TRW management recently maintained a cautious view on a European recovery but indicated that when the recovery does come, it is likely to be a significant tailwind.
“Mgmt said that flexible and still underutilized capacity at 8-10% of W. Eu plants may make it possible to run throughput through those facilities without incremental capital, which should result in significant operating leverage,” the report noted. “However, mgmt. also cautioned against directly comparing the current Europe situation vs. the 30%+ incremental margins that TRW delivered coming out of the US rebound back in 2010 given the less steep slope of the rebound.”
Some highlights from the report included: -”Plenty of dry powder with EPS opportunity.” -”Electronics oppty. should drive faster growth over time.” -”TRW remains our top supplier pick for 2014.”
TRW closed Monday at $73.96 with shares trading up at 2.41 percent.
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