In this article, we’ll discuss the 4 auto stocks analyst Itay Michaeli at Citi has a bullish stance on. If you want to read our discussion on the automotive industry outlook, go directly to This Analyst is Bullish on 8 Auto Stocks for the Rest of 2022.
4. Visteon Corporation (NASDAQ:VC)
Number of Hedge Fund Holders: 25
Visteon Corporation (NASDAQ:VC) is a Michigan-based automotive electronics supplier that was spun off from Ford Motor Company (NYSE:F) more than two decades ago.
On August 2, Michaeli increased the price target on Visteon Corporation (NASDAQ:VC) from $115 to $128 and maintained a Neutral rating on the stock. The analyst noted that the company reported “solid” Q2 2022 results, which reflected stellar margins, strong launch execution, and costs under control. Michaeli raised the full-year EPS estimates for Visteon Corporation (NASDAQ:VC) from $4.07 to $4.90.
Visteon Corporation (NASDAQ:VC) outperformed the revenue and EPS forecasts for the quarter. Revenue increased by 39% YoY to $848 million and outperformed the consensus forecast of $719.49 million. Meanwhile, the adjusted EPS of $1.34 was 48 cents higher than the consensus estimate. Visteon Corporation (NASDAQ:VC) also provided strong guidance as it sees 2022 revenue to be in the range of $3.15 billion to $3.35 billion. The midpoint of $3.25 billion is $30 million higher than the analysts’ forecast of $3.22 billion.
Overall, 25 hedge funds held a stake in Visteon Corporation (NASDAQ:VC) at the end of Q1 2022, up from 24 in the preceding quarter.
3. BorgWarner Inc. (NYSE:BWA)
Number of Hedge Fund Holders: 27
BorgWarner Inc. (NYSE:BWA) is an Auburn Hills, Michigan-based provider of automotive suppliers. The company has 93 sites spread across 22 countries.
Following the company’s Q2 2022 results, Michaeli increased the price target on BorgWarner Inc. (NYSE:BWA) from $43 to $45 and reiterated a Neutral rating on the stock. BorgWarner Inc. (NYSE:BWA) reported revenue and adjusted EPS of $3.76 billion and $1.05, respectively, outperforming the analysts’ estimate of $3.7 billion and 86 cents.
BorgWarner Inc. (NYSE:BWA) reiterated its 2022 revenue guidance to be in the range of $15.5 billion – $16 billion. The guidance assumes an organic growth of 11% to 14%. The midpoint of $15.75 billion is $140 million higher than the consensus estimate. BorgWarner Inc. (NYSE:BWA) also raised its adjusted EPS guidance to $4 – $4.40 from prior guidance of $3.90 – $4.25.
Here’s what Oakmark Funds said about BorgWarner Inc. (NYSE:BWA) in its Q4 2021 investor letter:
“We had the opportunity to purchase BorgWarner for a high single-digit multiple of our estimate of normal earnings due to elevated cyclical concerns and uncertainty about the longer term impact of powertrain electrification on the business. Currently, the company’s earnings are depressed due to semiconductor supply constraints that are impacting the entire industry. We expect these constraints to prove transitory, and we’re confident that component shortages will be resolved in the coming years. Furthermore, we believe that OEMs are likely to rely heavily on third-party suppliers, like BorgWarner, to leverage R&D expenses to enhance innovation and speed-to-market in an electrified world. For decades, we’ve been impressed with how BorgWarner management has successfully acquired and scaled fuel efficiency technologies for internal combustion engines. We see strong parallels and underappreciated potential in the acquisitions the company has made over the past 5+ years in key electric vehicle technologies. We believe the company is well-positioned to manufacture and integrate new propulsion systems and components to meet customer demands.”
Bailard Inc was the leading hedge fund investor in BorgWarner Inc. (NYSE:BWA) during Q1 2022.
2. Autoliv, Inc. (NYSE:ALV)
Number of Hedge Fund Holders: 35
Autoliv, Inc. (NYSE:ALV) is a Stockholm, Sweden-based provider of safety supplies to the automotive industry. The company has a presence in over 27 countries.
On July 25, Michaeli increased the price target on Autoliv, Inc. (NYSE:ALV) by 18.67%, or $14 to $89, after the company posted strong Q2 2022 results. The analyst maintained a Neutral rating on Autoliv, Inc. (NYSE:ALV) stock. He sees a positive trajectory for the margins as the management’s commentary on cost recoveries was upbeat.
The Q2 2022 results reflected the ability of Autoliv, Inc. (NYSE:ALV) to combat inflation as the company reported a significant EPS beat after raising its prices in June. Autoliv, Inc. (NYSE:ALV) reported an adjusted EPS of 90 cents that outperformed the analysts’ forecast of 36 cents by a significant margin. Revenue increased by 3% YoY to $2.08 billion, beating the analysts’ expectation of $2.04 billion.
Beddow Capital Management increased its stake in Autoliv, Inc. (NYSE:ALV) by 5% during the second quarter of the year.
1. Ford Motor Company (NYSE:F)
Number of Hedge Fund Holders: 46
Ford Motor Company (NYSE:F) is a Dearborn, Michigan-based auto manufacturer. The company has the distinction of being the fourth biggest auto manufacturer in the world.
On August 2, Michaeli increased the price target on Ford Motor Company (NYSE:F) from $15 to $16 and reiterated a Neutral rating on the stock. The analyst closed his “90-Day Upside Catalyst Watch” on Ford Motor Company (NYSE:F) as he thinks that the near-term catalysts have been factored into the stock. Michaeli increased the full-year EPS estimates on Ford Motor Company (NYSE:F) from $1.98 to $2.02. The company is in the process of simplifying the operations of conventional fuel-powered automobiles.
Furthermore, Ford Motor Company (NYSE:F) is also working towards making its operations leaner as it believes that there is an excess workforce at some locations. In July, the company reported a 36.6% YoY jump in auto sales to 163,942 vehicles as opposed to the auto industry experiencing a fall of 10.5% during the same period.
Ford Motor Company (NYSE:F) was discussed in the Q1 2022 investor letter of Baron Funds. Here’s what the fund said:
“Ford (NYSE:F) is another example of typical industrial manufacturing business executive mindsets. The April 18, 2022, Bloomberg Businessweek cover story features Ford CEO Jim Farley behind the wheel of an electrified Ford F-150 Lightning. The article is titled, “Hey Elon, THIS is a truck.” I thought the article was terrific. One idea especially stood out to me. Since the F-150 is such a popular vehicle, it “argued for a gradual approach to electrification. Essentially the company retrofitted an existing F-150 with an electric powertrain rather than develop an entirely new truck.” No all-in financial and operation bet by this company on electrification.”
You can also take a peek at The 10 Stocks That Jim Cramer Is Talking About and Top Ten Semiconductor ETFs to Buy in 2022.
