Barclays On Tenneco: 'China Emissions Growth Finally Arrives'

In a report published Tuesday, analysts at Barclays maintain their Equal-Weight rating on

. The price target has been raised from $57 to $63. The company's 1Q results stand testament to the important of China emissions to Tenneco's growth. Following more than three years of implementation and enforcement delays, the long awaited growth for both Ride Performance and Clean Air has been reported for Q1, driven by the APAC region. Although the company is likely to witness some diesel mix headwinds in Europe in the mid-term, investors are more likely to focus on the expected acceleration in organic growth, especially APAC growth, for the remainder of 2015. "Indeed, as TEN launches a full US-10 compliant system on a medium-duty truck in North America (yet to be disclosed), China NS4 emissions enforcement rates increase, new business with Kubota/AGCO ramps, and new intelligent suspension business kicks in, there are numerous examples to point to that should help drive an acceleration in organic growth for the remainder of the year," the analysts explained. However, Tenneco has posted in-line EPS for 1Q, with a decline in EBIT margins in Europe, South Africa and India. "Weak European aftermarket + unfavorable mix in Ride Performance drove the weaker-than-expected ESI results, and benefits from restructuring haven't come as quick as we anticipated," the analysts added.