Morgan Stanley downgrades Phinia on ‘more bearish’ auto supplier view

Morgan Stanley downgraded Phinia to Equal Weight from Overweight with an unchanged price target of $50. The firm also downgraded its U.S. auto industry view to In-Line from Attractive. The downgrade is driven by a combination of international, domestic and strategic factors that may not be fully appreciated by investors, the analyst tells investors in a research note. The firm says U.S. auto inventories are on an upward slope with vehicle affordability still out of reach for many households. In addition, credit losses and delinquencies continue to trend upward for less-than-prime consumers, adds Morgan Stanley. Further, China’s two-decade-long growth engine has reversed in terms of China profits flipping to losses and China producing nearly 9M units more than it sells locally, adds the firm. It is taking an “incrementally more bearish” view on the U.S. auto suppliers. Morgan sees the ongoing cycle of negative revisions lasting into 2025, limiting opportunities for investors tempted to go “bottom fishing” for value.