TD Cowen lowers Lear stock target, maintains buy rating on first-quarter revenue



TD Cowen revised its financial outlook on Tuesday Lear Corporation (NYSE: ), a leading automotive technology company, lowered its stock price target to $165 from $182 previously, while maintaining a positive outlook and a Buy rating.

Analysts at the company said first-quarter 2024 revenue and operating margins were in line with guidance provided in late March. Nonetheless, flat seat gross margin (GoM) did not meet market expectations.

The analyst pointed out that Lear's profit margin guidance for the second quarter was weaker than expected, with more emphasis on the second half of 2024. . Additionally, benefits are expected from automation, restructuring actions and commercial negotiations.

The revised share price target is based on the sum-of-the-parts (SOTP) valuation methodology. This approach involves valuing each of the company's segments separately and then combining them to form an overall valuation. The analysts' decision reflects a more cautious stance on the company's near-term financial performance, while still recognizing its growth potential in the second half of the year.

Lear's first-quarter results are under scrutiny as the auto industry faces ongoing challenges including supply chain disruptions and changing consumer demand. Despite these obstacles, the company still managed to meet its previously set guidance for the quarter.

Investors and market watchers will be closely watching Lear's progress throughout the year, especially in the second half, as the company aims to improve margins and capitalize on its backlog of orders. The automation and restructuring actions taken by Lear, as well as the outcome of commercial negotiations, will play a key role in its financial trajectory through the remainder of 2024.

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Investment Professional Insights

As Lear Corporation navigates the complexities of the automotive industry, real-time data from InvestingPro provides a snapshot of the company's financial health. Lear's market capitalization is $7.19 billion, and the stock's price-to-earnings ratio is 13.03, which is attractive compared to its recent earnings growth.

The PEG ratio, which measures a stock's price relative to its earnings growth, is significantly lower at 0.18, indicating the potential for investment value relative to expected earnings growth.

Despite the challenges of gross profit margin, which currently stands at 7.85%, Lear remains a leader in the auto parts industry. Analysts highlighted that the company is trading near a 52-week low, but they forecast profitability for the year to be in line with the past 12 months. In addition, Lear has maintained dividend payments for 14 consecutive years, reflecting its commitment to shareholders, with a current yield of 2.24%.

For those considering investing in Lear, two InvestingPro Tips provide further insight: Analysts have recently cut earnings for the period ahead, and the share price action has been quite volatile.

For deeper analysis and more exclusive tips, visit https://www.investing.com/pro/LEA and use the coupon code PRONEWS24 Annual or biennial Pro and Pro+ subscriptions receive an additional 10% discount. There are 6 additional InvestingPro Tips that can provide valuable guidance for your investment decisions.

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