WFC says chip shortage to hit 2022 recovery for autos and parts

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10/09/2021 11:40

** Wells Fargo lowers 2021 and 2022 earnings estimates on
U.S. auto suppliers, flagging worsening impact from
semiconductor shortage
    ** Analyst Colin M. Langan says widening chip supply
shortage is major factor that has led to decline of "value"
automakers and sector's key suppliers, including BorgWarner
 BWA.N , Avient  AVNT.N 
    ** "Expect value to outperform (again) once companies update
their outlook for lower production & investors have line of
sight to a multi-year auto recovery," adds Langan
    ** Langan picks Ford  F.N  and BWA as his top picks, adding
Ford will likely recover from chip shortage by 2023, while being
optimistic about BWA's long-term EV strategy
    ** Langan sees most indicators of auto demand as positive
and supportive of higher sales. Adds consumers are anticipating
supply side issues to curb, to improve pricing of cars and parts
to normalized rate 
    ** YTD stock performance of auto stocks: Ford up ~45%, GM
 GM.N  up 17%, U.S.-listed shares of Stellantis  FCAU.N  gained
35%; by contrast, Tesla Inc  TSLA.O  up only ~7%
    ** YTD stock performance of auto suppliers: BWA up 10.25%,
AVNT up 19%, Aptiv  APTV.N  up 15%, Veoneer  VNE.N  surged 64%
    ** Brokerage makes changes to following PTs:
    
 COMPANY             NEW PT  OLD PT
 Aptiv                $124    $125 
 Autoliv               $95     $99 
 BorgWarner            $65     $66 
 Cerence              $113    $115 
 Dana                  $31     $32 
 Ford                  $17     $18 
 General Motors        $63     $67 
 Lear                 $199    $203 
 Tenneco               $20     $25 
 Visteon              $101    $103 
 
    

 (Reporting by Tapanjana Rudra and Karina Dsouza)
 ((Tapanjana.Rudra@thomsonreuters.com;))