J.P Morgan Raises PT on Gentex Corporation To $37

J.P Morgan raises Gentex Corporation's GNTX Dec-2011 price target to $37, which applies a 20x PE on its 2014E EPS of $2.00 discounted back one year. Gentex non-RCD traditional business seems to be growing faster than expected as revealed by Q1 guidance. On RCD, installation rates in the next 1-2 years could be stronger than expected, though we expect RCD's EPS contribution to peak at $0.48 in 2014, after which continued overseas RCD growth could be offset by declines in US RCD volumes. At $34, most of the RCD upside seems priced in, but J.P Morgan is Neutral with a positive bias given potential for faster than expected near-term RCD ramp and upside potential to CSM volume projections. J.P Morgan's new estimates essentially assume GNTX's EPS doubles in the 4-year period from 2010- 2014. EPS estimate in FY2011 is $1.15 and in FY2012 is $1.40. We also introduce 2013 at $1.65 and 2014 at $2.00. By 2014, when back up cameras are fully required on all US vehicles, we assume mirror-based display options will have a 42% penetration rate of the US SAAR and that RCD's incremental ASP will be $70. J.P Morgan has a $37 PT and Neutral rating on GNTX GNTX closed Thursday at $33.50