Wells Fargo Securities Reiterates Outperform Rating on Magna (MGA)

Wells Fargo Securities is out with a research report this morning, where it reiterates its Outperform rating on Magna International Inc. MGA; it lowered its valuation range to $92-$100, from $94-103. The WFS analysts cited a revision to the company’s cash payments to Stronach trust for the Class B shares. They have thus altered estimates slightly for the quarter, leaving the full year intact at $7.10 per shares in 2010 and $8.35 per share in 2011. As for the methodology behind their valuation, the WFS analysts remarked, “Our 12-month valuation range applies an EV-to-EBITDA multiple of 4.5-5.0x to our 2011 EBITDA estimate. Primary risks include substantial revenue exposure to the Big Three in North America (approximately 80-85% of total N.A. revenues), a significant decrease in European vehicle sales, and exposure to high raw material prices (notable steel and resin).”