J.P. Morgan Reiterates a Buy Rating on Magna International

In a report released today, Ryan Brinkman from J.P. Morgan reiterated a Buy rating on Magna International (NYSE: MGA), with a price target of $54. The company’s shares opened today at $39.05.

Brinkman observed:

“Magna reported better than expected 3Q earnings, on both stronger revenue and margin. The higher revenue was driven by solid organic growth globally which nicely outpaced the change in industry light vehicle production. The margin beat was largely attributable to a significant outperformance in Asia where margin tracked 10.5% vs. JPM 7.0%. While the 3Q results overall were above our expectation, our underlying estimates remain largely unchanged, based upon management’s relatively more cautious tone regarding 4Q and given the only maintained full year guide. On the firm’s earnings conference call, management identified three factors which could weigh on 4Q margin: (1) A geographical sales shift, with less sales in North America where margin is stronger, partially offset by more sales in Europe, where margin is softer; (2) Higher “tooling, engineering, and other” sales vs. prior expectation (these sales typically earn low or no margin); and (3) Continued launch costs stemming from a sizable new program that started in 3Q and has incurred a bit higher costs than expected. We now forecast 4Q16 margin to track 7.9% vs. 8.1% prior. Our 2016 EPS estimate ticks slightly higher, on confluence of the 3Q beat and 4Q miss relative to our prior expectations.”

According to TipRanks.com, Brinkman is a 5-star analyst with an average return of 10.5% and a 59.0% success rate. Brinkman covers the Consumer Goods sector, focusing on stocks such as Tower International, Cooper Tire Rubber, and Tenneco Automotive.

Magna International has an analyst consensus of Moderate Buy, with a price target consensus of $49.

The company has a one year high of $48.68 and a one year low of $30.41. Currently, Magna International has an average volume of 1.33M.

Magna International, Inc. designs, develops and manufactures automotive systems, assemblies, modules and components. It assembles complete vehicle, primarily for sale to original equipment manufacturers of cars and light trucks in North America, Europe, Asia, South America and Africa. The company was founded by Frank Stronach in 1957 and is headquartered in Aurora, Canada.