'ICE Is Nice' Thesis: Why BorgWarner Is Well Positioned For 2023, Analyst Says

Zinger Key Points
  • The company has a portfolio of ICE and hybrid-catered products.
  • Analyst expects to see OEM customers dial back the pace of EV investments.

Over the past three months, the average analyst price target for BorgWarner Inc. BWA has risen by 1%.

Unit volume and profitability of businesses with exposure to internal combustion engines (ICE) may improve heading into fiscal 2023, according to Morgan Stanley.

The Analyst: Adam Jonas upgraded the rating for BorgWarner from Underweight to Equal-Weight, while raising the price target from $35 to $45.

The Thesis: The company has a portfolio of ICE and hybrid catered products, which are well positioned for the "ICE is Nice" thesis, Jonas said in the upgrade note.

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“In our view, the ICE/hybrid portfolio has a higher technological moat while also having a longer tail than the investment community might appreciate,” he said.

“We expect to see OEM customers dial-back the pace of EV investments into a less certain environment, increasing the percent of ICE revenue in BWA's mix,” Jonas stated. “While car companies may not issue big press releases for selling high-margin ICE products… that's exactly what we believe will support the results of players like BWA into FY23."

BWA Price Action: Shares of BorgWarner had declined by 0.47% to $42.04 at the time of writing Monday.

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Posted In: Analyst ColorNewsUpgradesPrice TargetTop StoriesAnalyst RatingsAdam JonasMorgan Stanley
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