UBS gears up for margin expansion in 2022 in automotive industry

US Automotive Manufacturing

08/10/2021 12:16

** UBS anticipates Q3 results for the majority of the
European and U.S. automotive industry to be weak, hurt by chips
drought, but the brokerage sees 2022 earnings growth
underestimated by consensus  
    ** "Likely profit warnings across our supplier coverage due
to lower Q3 production. However, the segment is well positioned
to generate strong margin expansion in '22," UBS adds
    ** The brokerage forecast a 15% global production growth in
2022 to 8 mln cars
    ** "To play the likely re-acceleration", from its
"buy"-rated stocks UBS recommends Faurecia  EPED.PA  and Conti
 CONG.DE    
    ** The brokerage also upgrades Daimler  DAIGn.DE  to "buy"
from "neutral" and ups its target price on the stock by 26.6% to
EUR 100
    ** It cites a substantially underestimated strong earnings
momentum into 2022, rapidly accelerating luxury EV segment and
value creation after trucks spin-off 
    ** According to the broker, in contrast to suppliers, tire
makers might have strong Q3 results, helped by improved pricing,
strong price/mix and supportive competitive landscape
    ** Michelin  MICP.PA  ("buy") is the broker's top pick in
tires

 (Reporting by Tommy Lund)
 ((Tommyalexander.lund@thomsonreuters.com))