Goldman Sachs Raises Price Target on Magna International (MGA)

Goldman Sachs is out with a research report this morning, where it reiterates its Sell rating on Magna International MGA; it has a $94.00 price target on the stock, up from $82.00. The GS analysts raised estimates for the company following its Q3 earnings, which they believe reflects slightly higher content assumptions for Europe and North America and stepped up investments in Latin America, a pull forward of margin recovery in Europe, and a lower tax rate. They said, “Despite the outperformance of MGA shares YTD we are maintaining our Sell rating because with the elimination of the dual class share holder structure much of the discount to peers has been removed and we see don't see much incremental value to be captured in the shares relative to other covered suppliers. We also see less upside from balance sheet repair vs other peers given MGA's very conservative capital structure.” As for valuation, the analysts remarked, “Our six-month price target of $94 is derived by applying unchanged multiples of 4.5x and 11x to our revised normalized EBITDA and EPS estimates. We also overlay a modest probability of default.”