Delphi Shares Downgraded To Equalweight At Barclays: Here's Why

In a report published Thursday, Barclays analyst Brian A. Johnson downgraded the rating on

from Overweight to Equal-Weight, while lowering the price target from $99 to $81. The analyst expects macro trends to limit upside to the stock valuation at least for the remainder of 2015. "[W]ith negative earnings revisions likely to emerge, and with macro concerns and risks of program delays likely to linger through at least the end of the year, we have a tough time seeing the stock work – even if it is getting growth from other regions," analyst Johnson pointed out. The Barclays report noted, however, that Delphi was an impressive secular story with near double-digit EPS CAGR expected during 2014-2017, despite the China headwinds. On the other hand, the report also pointed out that China played a significant role in the company's growth story, accounting for nearly 18 percent of its revenue in 2014, while Asia accounts for 45 percent of the backlog during 2014-2017. "While DLPH still offers an impressive EPS growth story even in the face of the China headwinds, we fear that the content growth story may be somewhat constrained if programs are delayed," analyst Johnson stated, while adding that it is unlikely for the company to meet its target of outpacing the Chinese market by 10 points. "In the case of DLPH, it's tough to justify the stock trading at a peak multiple when one of the central growth drivers is challenged," the Barclays report added.