BorgWarner: Strong Growth Potential and Strategic Positioning in the EV Market

In a report released today, Colin Langan from Wells Fargo reiterated a Buy rating on BorgWarner (BWA – Research Report), with a price target of $44.00.

Colin Langan has given his Buy rating due to a combination of factors that highlight BorgWarner’s strong performance and growth potential. Despite being perceived as a value auto supplier, BorgWarner has demonstrated superior growth and operational metrics compared to its peers. The company’s growth of margin (GoM) is among the best in the industry, and its product analysis suggests this trend will continue over the next five years. Additionally, BorgWarner’s strong presence in the electric vehicle (EV) market, with significant content opportunities in battery electric vehicles (BEVs), positions it well for future growth.
Furthermore, BorgWarner’s strategic acquisitions and capital allocation have been effective, despite some criticisms. The acquisition of Delphi Technologies and subsequent spin-off of PHIN have proven to be astute moves, enhancing BorgWarner’s position in the market. The company’s valuation remains attractive, trading below the sector average on EV/EBITDA, yet outperforming on key operational metrics. This, combined with a focus on share buybacks over mergers and acquisitions, likely appeals to investors seeking value and growth potential.

In another report released on May 22, Piper Sandler also maintained a Buy rating on the stock with a $37.00 price target.

Based on the recent corporate insider activity of 48 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of BWA in relation to earlier this year.