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UPDATE: J.P. Morgan Lowering Price Target on TRW Automotive


J.P. Morgan Chase & Co. is out with a research report on TRW Automotive (NYSE: TRW) and it has an Overweight rating on shares, but is lowering its price target to $53 from $69.

In a note to clients, J.P. Morgan Chase & Co. writes, "The one bright spot to emerge from the call was that TRW's net pension deficit (at YTD returns and current discount rates) had only widened by $300MM from 2010-end levels (about one-half as bad as we had originally expected), aided by a healthy asset allocation to interest rate derivates that appreciate when rates go down (similar to VC). This information, coupled with our recently moderated 2012 industry volume assumptions (-5% European production, modest growth in NA production) lead us to cut 2012 EPS to $5.50 from $6.15 (we continue to use a fairly full 34% 2012 tax rate). The stock is clearly cheap even on our reduced estimates (6.7x P/E on 2012E), but antitrust concerns and improving but still limited visibility on magnitude of potential 2012 margin pressure are likely to keep TRW out of favor near term. Maintain Overweight but no need to chase near term."

Shares of TRW lost $1.71 yesterday to close at $37.13.

Posted-In: J.P. Morgan Chase & Co.Analyst Color Price Target Analyst Ratings


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