Adient (ADNT) and Magna International (MGA) face persistent challenges as BofA Securities lowered its North American production estimates reflecting factory downtime and an increase in Chinese vehicle imports into Mexico, the firm said in a note on Tuesday.
The firm said that it has flat earnings expectations for auto suppliers amid weak management guidance and limited near-term catalysts.
Adient's weak production volumes in Europe and China are putting pressure on its long-term profitability and while margins in North America are improving, the company may need additional cost-cutting measures in Europe, BofA added.
The firm said Magna was positioned to benefit from electric vehicle growth but slower adoption and uncertain industry conditions pose risks to margin expansion in 2025. Cost-cutting could help in the short term but it might limit future growth.
BofA downgraded Adient to underperform from neutral and reduced the price objective to $18 from $24. The firm downgraded Magna to neutral from buy and trimmed the price objective to $48 from $52.
Price: 14.03, Change: -0.71, Percent Change: -4.82
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