Not every auto supplier will survive the rise of electric. But BorgWarner Inc. BWA hopes to ride the current — and Oppenheimer said it’s situated to do do.
The Rating
Oppenheimer analyst Noah Kaye initiated coverage on BorgWarner with an Outperform rating and $63 price target.
The Thesis
The firm’s differentiated technology is considered a buffer against industry disruptions. Its products propel vehicles and are agnostic to the energy source, Kaye said.
“As the global auto industry evolves to meet increasingly stringent emissions regulations, we expect BorgWarner to benefit from accelerating vehicle electrification, continued runway on turbochargers and overall strong position across product lines for internal combustion engines,” the analyst said in a Thursday note.
BorgWarner ranks No. 2 among turbocharger manufacturers with 27-percent market share; boasts between 20- and 25-percent share for combustion engines; and is better positioned to support EVs with recent acquisitions, according to Oppenheimer.
At the same time, Oppenheimer anticipates BorgWarner will undergo a transformation from a parts supplier to a technology partner valued by automakers for its expertise in limiting emissions.
The analyst forecasts 7.1-percent revenue compound annual growth, with $1.5 billion to expend in EV-related mergers.
Price Change
At the time of publication, shares were trading up 1 percent at $53.60.
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