Wells Fargo expects U.S. autos to recover in 2022; BorgWarner top pick

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16/12/2021 09:30

** Wells Fargo expects the U.S. auto industry to recover in
2022, with a potential reversal of trends in semiconductor
supply shortages and higher commodity costs
    ** Brokerage prefers auto supplier BorgWarner  BWA.N  as the
top pick as it continues to expect margin growth
    ** Wells Fargo analyst Colin Langan prefers automaker Ford
 F.N  over General Motors  GM.N  given restructuring benefits
    ** Automobiles have become increasingly dependent on chips
and its shortage forced dealers and automakers to operate with
far leaner inventories than usual  urn:newsml:reuters.com:*:nL8N2P48BO
    ** "Suppliers felt the most pain, so (they) should see the
biggest 2022 gain" - Langan
    ** Brokerage remains positive on Ford and GM, but says both
companies have some recovery offsets like commodities and weak
business mix
    ** Brokerage upgrades Magna International  MGA.N  to
"overweight" from "equal weight," given its recent share
underperformance and strong business mix in 2022
    ** Wells Fargo upgrades Cerence  CRNC.O  to "overweight"
from "equal weight" and downgrades Lear  LEA.N  to "equal
weight" from "overweight" on valuation
    ** As of last close, the S&P 500 automobiles and components
index  .SPLRCAU  has risen ~42% YTD vs the broader S&P 500 index
 .SPX  which has risen about ~25% so far
    ** Brokerage revises PT of the following companies:
    
    
 Company Name      New PT  Old PT
 Adient            $54     $51
 Aptiv             $126    $117
 Autoliv           $109    $108
 BorgWarner        $62     $61
 Cerence           $85     $91
 Dana              $27     $26
 Incorporated              
 Ford Motor        $25     $19
 General Motors    $74     $67
 Lear Corporation  $195    $191
 Magna             $93     $84
 International             
 Rivian            $110    NA
 Automotive                
 Tenneco           $22     $19
 Tesla             $860    NA
 Visteon           $84     $86
 
    
    
    

 (Reporting by Siddarth S in Bengaluru)
 ((Siddarth.s@thomsonreuters.com;))