J.P Morgan Upgrades Borg Warner To Overweight & Raises The PT To $84

J.P Morgan upgrades Borg Warner BWA to Overweight, raises estimates, and raises the PT to $84 vs. $67 earlier. JPM believes two consecutive years of 20% top line growth, and 15-20% contribution margins through 2012 are likely. A disappointment on annualized contribution is less likely at BWA than other suppliers due to stronger than expected near-term revenue growth/operating leverage, and new- found operating leverage out of its EM businesses. Specifically, some may be overlooking that BWA's start-up regions are now coming off a period of heavy investment that began in 2007. China, Poland, and Hungary are now ~15% of revenue, and it understands that these regions are now ready to enjoy material revenue uplifts without much additional fixed cost growth. J.P Morgan raises its 2011 and 2012 EPS ahead of 4Q earnings release on a combination of higher industry production expectations and improved confidence on cost growth containment. JPM's 2011 and 2012 EPS are now $4.40 and $5.60, respectively. BWA closed Friday at $67.03