Benzinga - Over the past three months, the average analyst price target for BorgWarner Inc. (NYSE: NYSE:BWA) has risen by 1%.
Unit volume and profitability of businesses with exposure to internal combustion engines (ICE (NYSE:ICE)) may improve heading into fiscal 2023, according to Morgan Stanley (NYSE:MS).
The Analyst: Adam Jonas upgraded the rating for BorgWarner from Underweight to Equal-Weight, while raising the price target from $35 to $45.
The Thesis: The company has a portfolio of ICE and hybrid catered products, which are well positioned for the "ICE is Nice" thesis, Jonas said in the upgrade note.
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“In our view, the ICE/hybrid portfolio has a higher technological moat while also having a longer tail than the investment community might appreciate,” he said.
“We expect to see OEM customers dial-back the pace of EV investments into a less certain environment, increasing the percent of ICE revenue in BWA's mix,” Jonas stated. “While car companies may not issue big press releases for selling high-margin ICE products… that's exactly what we believe will support the results of players like BWA into FY23."
BWA Price Action: Shares of BorgWarner had declined by 0.47% to $42.04 at the time of writing Monday.
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