BorgWarner Has Hidden Value In A Hybrid-Heavy Future: Analyst

Goldman Sachs analyst Mark Delaney upgraded BorgWarner Inc. BWA from Neutral to Buy, with a price forecast of $34.

Per Delaney, BorgWarner has a below-average level of U.S. imports, which means it faces relatively limited risk from ongoing or future tariffs.

In contrast to many Western suppliers that have struggled in China due to an unfavorable customer mix, BorgWarner stands out with a stronger positioning in the region.

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Around 20% of the company's total revenue comes from China, and approximately 75% is tied to domestic Chinese original equipment manufacturers (OEMs). About 90% of its eProduct business in China is also linked to these domestic OEMs.

Delaney highlighted that BorgWarner's hybrid and internal combustion engine products are expected to have a longer runway, and the company's broad portfolio—which includes products for all powertrain types—positions it well to navigate evolving market trends.

The analyst also highlighted that BorgWarner has a number of upcoming product launches with domestic Chinese auto OEMs, further strengthening its foothold in this key market.

With higher content per vehicle opportunities in both hybrid and battery electric vehicles, BorgWarner is expected to benefit from the rising share of hybrid volumes in the near to medium term.

While its eProduct division is still operating at a loss, the analyst stated that ongoing restructuring efforts, coupled with long-term growth, will help the company move toward profitability.

Price Action: BWA shares closed lower by 4.54% to $25.67 on Thursday.

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