Goldman Sachs Continues To See Upside In Lear Corp 2011 Guidance

Lear Corp. LEA introduced its 2011 guidance in conjunction with its presentation on Tuesday at the Detroit auto show. The company guided to revenue of $12.6 bn-$13.0 bn with a mid-point of $12.8 bn; below Goldman Sach's and the Street estimate of $13.1 bn. Lear forecasts operating income of $700 mn-$740 mn with the mid-point of $720 mn slightly below Goldman's forecast of $746 mn and consensus of $734 mn. However, the EPS range of $9.20-$9.85 came in well ahead of the consensus expectation of $9.10 and was in line with Goldman's forecast of $9.49 at the mid-point driven by a lower tax rate. Free cash flow guidance of $400 mn for 2011 came in slightly below our forecast of $433 mn. The company also revised its three-year backlog upwards to $2.2 bn from $1.9 bn previously and above Goldman's estimate of $2.1 bn. Though the guidance for the top line and core operating income came in slightly below expectations, Goldman Sachs is encouraged by the company's backlog which came slightly ahead of its expectations. Goldman thinks there is upside risk to Lear's revenue projections, which is predicted at 6% global production growth. Goldman has a Buy rating on LEA LEA is trading higher at $109.16