BofA: Lyft, Magna Could Be The First Of Many Autonomous Vehicle Partnerships

Magna International Inc. (USA) MGA announced a multiyear partnership with Lyft this week — and a $200-million investment in the ride-hailing service — to develop and manufacture self-driving systems at scale.

The strategy puts the companies on pace to commercialize and deploy autonomous vehicle tech alongside competitors, a feat expected to entice additional Magna collaborators.

The Rating

Bank of America Merrill Lynch analyst John Murphy reiterated a Buy rating on Magna with a $67 price target.

The Thesis

By BofA's assessment, Magna boasts the manufacturing capabilities lacking in most auto companies that are attempting to scale AV products, Murphy said in a note. (See the analyst's track record here.) 

“We believe MGA’s exposure and expertise in numerous automotive component systems, as well as complete vehicle assembly, provides it with a unique understanding and position as a Tier 1 supplier," the analyst said. 

The complete vehicle assembly business, in particular, is expected to draw manufacturing contracts from traditional automakers, nascent industry contributors like Tesla Inc TSLA, Apple Inc. AAPL or Alphabet Inc. GOOGL GOOG, and mobility services operators like Uber.

This opportunity — coupled with expansion in China, growth in the transmission manufacturer Getrag, a ramping of the Austrian manufacturing arm Magna Steyr and continued consolidation among auto suppliers — is seen to boost the Magna's top-line growth.

“MGA is one of the best-positioned suppliers over the long run, in our view, as its solid proprietary technology, expertise of the complete vehicle, and reputation among OEMs as a trusted global partner should allow the company to continue to win business and grow revenues in excess of market growth,” Murphy said. 

Price Action

Magna shares were down 1.52 percent after the open Friday. 

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Nvidia To Partner With Volkswagen, Uber For Self-Driving Car Technology

Photo courtesy of Magna.