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BorgWarner Incorporated (BWA), with a market cap of $8.2 billion, is a global leader in clean and efficient technology solutions for combustion, hybrid, and electric vehicles. Based in Auburn Hills, Michigan, the company specializes in supplying auto parts such as four-wheel and all-wheel drive transfer cases, automatic transmissions, and timing chain systems, which enhance vehicle performance, efficiency, stability, and air quality.
Shares of BorgWarner have underperformed the broader market considerably over the past year. BWA has declined 23.8% over this time frame, while the broader S&P 500 Index ($SPX) is up 26.2%. In 2024, the stock is up marginally, compared to SPX’s 11.2% return on a YTD basis.
Narrowing the focus, BWA also trails behind the S&P 500 Cons Disc Sector SPDR’s (XLY) 15.2% gains over the past year.
BWA's underperformance relative to the broader market over the past year could be attributed to supply constraints and soaring inflation rates. However, shares of BorgWarner surged 8.4% on May 2 following its upward revision of the full-year adjusted profit outlook. Driven by sustained demand for its exhausts, turbos, and emission control systems, the company now forecasts its full-year adjusted profit per share to fall between $3.80 and $4.15.
For the current fiscal year, ending in December, analysts expect BWA’s EPS to improve 8.5% year over year to $4.07. However, the company’s earnings surprise history is mixed. It exceeded the consensus estimate in three of the last four quarters while missing on one other occasion.
BorgWarner stock has a consensus “Moderate Buy” rating overall. Among the 16 analysts covering the stock, 10 advise a "Strong Buy," and the remaining six suggest a "Hold.”
This configuration is slightly more bullish than a month before, with nine analysts advising a “Strong Buy” rating.
On May 6, Barclays analyst Dan Levy maintained an “Overweight” rating on BorgWarner and raised the price target from $44 to $45. The new price target suggests that BWA stock could rally as much as 25.2% from its current price levels.
The mean price target of $42.38 suggests a 17.9% premium to BWA from current levels. The Street-high target of $52 represents an impressive upside potential of 44.7%.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
