This Analyst is Bullish on 4 Auto Stocks for the Rest of 2022

3. BorgWarner Inc. (NYSE:BWA)

Number of Hedge Fund Holders: 27

BorgWarner Inc. (NYSE:BWA) is an Auburn Hills, Michigan-based provider of automotive suppliers. The company has 93 sites spread across 22 countries.

Following the company’s Q2 2022 results, Michaeli increased the price target on BorgWarner Inc. (NYSE:BWA) from $43 to $45 and reiterated a Neutral rating on the stock. BorgWarner Inc. (NYSE:BWA) reported revenue and adjusted EPS of $3.76 billion and $1.05, respectively, outperforming the analysts’ estimate of $3.7 billion and 86 cents.

BorgWarner Inc. (NYSE:BWA) reiterated its 2022 revenue guidance to be in the range of $15.5 billion – $16 billion. The guidance assumes an organic growth of 11% to 14%. The midpoint of $15.75 billion is $140 million higher than the consensus estimate. BorgWarner Inc. (NYSE:BWA) also raised its adjusted EPS guidance to $4 – $4.40 from prior guidance of $3.90 – $4.25.

Here’s what Oakmark Funds said about BorgWarner Inc. (NYSE:BWA) in its Q4 2021 investor letter:

“We had the opportunity to purchase BorgWarner for a high single-digit multiple of our estimate of normal earnings due to elevated cyclical concerns and uncertainty about the longer term impact of powertrain electrification on the business. Currently, the company’s earnings are depressed due to semiconductor supply constraints that are impacting the entire industry. We expect these constraints to prove transitory, and we’re confident that component shortages will be resolved in the coming years. Furthermore, we believe that OEMs are likely to rely heavily on third-party suppliers, like BorgWarner, to leverage R&D expenses to enhance innovation and speed-to-market in an electrified world. For decades, we’ve been impressed with how BorgWarner management has successfully acquired and scaled fuel efficiency technologies for internal combustion engines. We see strong parallels and underappreciated potential in the acquisitions the company has made over the past 5+ years in key electric vehicle technologies. We believe the company is well-positioned to manufacture and integrate new propulsion systems and components to meet customer demands.”

Bailard Inc was the leading hedge fund investor in BorgWarner Inc. (NYSE:BWA) during Q1 2022.