Buckingham Neutral On Delphi With Growth Already Baked In

Delphi Technologies PLC DLPH was in freefall Thursday on no discernable news apart from a fresh sideline rating.

The Rating

Buckingham Research Group analyst Glenn Chin initiated coverage with a Neutral rating and $58 price target.

The Thesis

With global leadership in both internal combustion engines and hybrid and electric powertrains, the firm is expected to profit from shifting secular trends and increasingly stringent environmental regulations.

“While these tailwinds will be partially offset by a shift away from diesels, the net effect will be significantly positive such that the company's revenue growth should outpace global light vehicle production by 2 to 3 percent through 2020,” Chin wrote in a note.

The analyst warned that Delphi will initially suffer one-time adjustment costs associated with the spinoff from Aptiv PLC APTV and excess capital expenditures, but it will soon realize operating leverage and margin expansion.

The circumstances are seen to catalyze earnings-per-share growth beyond 2018 that is already baked into the current stock value.

Price Action

At time of publication, shares were down 3 percent at $52.46.

Related Links:

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

With Delphi Splitting In Two, Morgan Stanley Says One Stock Is Worth Buying

Photo courtesy of Delphi.