3 Reasons To Buy Lear According To Goldman Sachs

Lear Corporation LEA has a growing e-systems opportunity and could see content gains in its seating segment, according to Goldman Sachs.

The Lear Analyst: Mark Delaney upgraded the rating for Lear from Neutral to Buy, while raising its price target from $198 to $228.

The Lear Thesis: The opportunities in its e-systems and seating segments could allow the company to “continue outgrowing auto production,” Delaney said in the upgrade note.

The analyst mentioned 3 reasons for the upgrade:

• Lear’s E-Systems business, which currently contributes around 25% of total revenues, “has a high degree of exposure to secular themes in electrification, connectivity, and autonomy,” he wrote.
• Although the seating business, which contributes around 75% of total revenues, has less exposure to major secular growth trends, “we still anticipate growth in this segment, driven in part by the mix shift toward larger vehicles in the US and globally,” Delaney said. “We also see opportunities for content growth and share gain in Seating, driven by Lear’s more technical offerings,” he added.
• The company’s stock valuation is attractive, as it trades “at a discount relative to auto supplier peers,” the analyst noted.

LEA Price Action: Shares of Lear had risen by 1.59% to $179.83 at the time of publication Thursday.