Delphi Tech's Valuation 'Extremely Attractive'; BMO Names It A Top Pick

The Street has a lot of love for the nascent Delphi Technologies PLC DLPH, spun off from Delphi Automotives’ Aptiv PLC APTV at the end of 2017.

The firm added another positive rating to its cache Tuesday, boosting its ratio to nine Buys and three Holds.

The Rating

BMO Capital Markets analyst Richard Carlson initiated coverage with an Outperform rating and $73 price target. BMO named Delphi a top pick for 2018. 

The Thesis

The fluid state of auto lends opportunity for long-term revenue growth and strengthens Delphi against cyclical trends, Carlson said in a Tuesday note. 

“Following the spinoff from Aptiv, [the] valuation for Delphi Technologies has started much too low, in our view,” Carlson said. “The company is a pure-play and an industry leader in developing/enabling advanced propulsion technology, which we view as one of the most attractive areas to invest in the automotive space today.”

Macquarie anticipates a decade-long shift toward improved fuel efficiency and diminished emissions that favors and fortifies Delphi, which has exposure to both internal combustion engines and electric powertrain technologies. The firm’s customer diversification buffers it from client-specific concerns, Carlson said. 

Carlson projects Delphi's 2018, 2019 and 2020 earnings per share at $4.70, $5.30 and $5.90.

Price Action

At the time of publication, Delphi was trading up 3.28 percent at $54.19. 

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Photo courtesy of Delphi.