UPDATE: J.P. Morgan Downgrades Gentex Corporation to Neutral, Raises PT on Positive View, Moderate Near-Term Growth

In a report published Monday, J.P. Morgan analyst Ryan Brinkman downgraded the rating on Gentex Corporation GNTX from Overweight to Neutral, but raised the price target from $23.00 to $27.00. In the report, J.P. Morgan noted, “GNTX is the world's leading provider of electrochromatic auto-dimming mirrors, a market it created, as well as value-add products and technologies it has incorporated into the mirror, including, most recently, rear camera displays. We view GNTX as a highly innovative technology company that happens to operate within the auto parts sector. Through the constant development of new products and technologies, it has generated a 20% revenue CAGR over the past 25 years. Rather than pursuing growth at the expense of margin, GNTX's rapid sales growth through the development of new products and features on existing products has allowed it to offset annual customer price-downs, protecting EBITDA margins, which at 26% are ~2.5x the sector average and significantly above that of even next highest BWA at 16%. Although GNTX stands to benefit from pending legislation requiring backup camera protection, we acknowledge growth prospects are now more muted near-term by the delay in implementation of a rear camera backup display legislation and potential placement of rear camera displays in areas of the car other than the rear-view mirror. Our Neutral rating balances the moderate growth prospects near-term with our positive view of the company's innovative track record and a quality management team.” Gentex Corporation closed on Friday at $23.05.