Etienne Ricard, an analyst from BMO Capital, maintained the Buy rating on Magna International. The associated price target is $47.00.
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Etienne Ricard has given his Buy rating due to a combination of factors that highlight Magna International’s strategic positioning and potential for growth. The recent contract with Chinese OEM XPENG to produce two electric vehicle models at Magna Steyr’s European plant is a significant development. This contract not only enhances Magna’s global OEM relationships but also aims to improve the utilization and margin profile of its vehicle assembly unit, which has seen a decline in production capacity utilization.
Furthermore, the XPENG contract is expected to help Magna Steyr return to its historical production levels and potentially increase its European content per vehicle. The diversification of Magna Steyr’s revenue mix, especially with the inclusion of Chinese EVs, is a positive sign amid rising import duties. Additionally, Magna’s comprehensive vehicle assembly capabilities and its established presence in North America, Europe, and China position it well to capitalize on outsourcing opportunities and market expansions, supporting the Buy rating.