BorgWarner Shares Downgraded To Neutral By Goldman

Goldman Sachs has downgraded BorgWarner Inc. BWA to Neutral from Buy and cut its six-month price target to $35 from $37 on valuation as well as investors' concerns over medium-term execution as OEM powertrain strategies evolve.

"Overall we still remain positive on the company's ability to grow content per vehicle (CPV) and see solid mid-single digit top line growth, but we believe shares are reflecting this growth path as they are trading in line with our updated 6-month price target," analyst David Tamberrino wrote in a note.

Even in the late U.S. auto cycle, the analyst is confident that BorgWarner should be able to raise its CPV for internal combustion engine and hybrid powertrains. On the other hand, Tamberrino sees the company's electric powertrain CPV to normalize in the wake of as ICE and hybrids.

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"Even so, the company remains exposed to secular growth in the industry from the synchronized tightening of fuel efficiency standards globally that is driving increased penetration rates of its core products," Tamberrino noted.

The analyst expects gasoline turbochargers to offer significant growth through 2020 even as diesel turbochargers have reached an apparent steady state penetration rate.

Tamberrino cut his 2016/2017 EPS view to $3.26/$3.57 from $3.28/$3.54.

Shares of BorgWarner closed Wednesday's trading at $36.30.

Full ratings data available on Benzinga Pro.