Argus Still Bullish On Gentherm, Lowers Estimates And Price Target

Argus analyst David Coleman remained bullish on Gentherm Inc THRM with a Buy rating. However, the analyst lowered his estimations and the price target to $44.

In a note to clients, Coleman wrote, "We expect Gentherm to post solid sales and earnings this year, as more automotive manufacturers incorporate Climate Control Seats (CCS) and other Gentherm content into their vehicles. We also expect the company to benefit from its recent acquisitions of Global Power Technologies (GPT) and Sub-Zero Products (CSZ)."

The analyst reduced his 2016 EPS estimation to $2.66 from $2.71 after the company reported weaker-than-expected first quarter results. He believes his estimation is in line with  consensus. However, Argus maintained its EPS estimation of $3.14 for the year 2017, which is more than the consensus of $3.00.

The brokerage continues to view Gentherm as favorably valued based on its robust balance sheet, attractive products, and potential for leveraging its technology into fresh apps. Of late, shares of the company have underperformed the market in the last three months dropping 4.8 percent while the broader index, S&P 500, gained 7.1 percent.

The analysts thinks Gentherm continues to enjoy a dominant position in climate-control seating, and, as its partnership with Mattress Firm suggests, has tremendous opportunities to expand into other non-automotive markets. Aside from these, its new battery thermal management system should be accretive to earnings in 2017.