TRW Automotive (TRW) Among JP Morgan Analysts' Top Picks

JP Morgan analysts Himanshu Patel and Ryan Brinkman reiterated their Overweight rating of TRW Automotive Holdings Corp.(NYSE: TRW) and said that the company "remains one of our top picks."

The JP Morgan analysts wrote that, "adjusting the Q4 annualized EBIT excluding commercial settlement (i.e., $940MM) down for impact of lower sales at a 22.5% assumed decremental margin (i.e., -$203MM), one arrives at a potential 2010 EBIT of $737MM (JPM 2010E EBIT is $612MM or $1.80 EPS). While commodity costs, pension costs, and reinstatement of competitive pay/benefits will trim the $737MM figure, at this stage, we see no risk to our 2010 forecast and see signs of some upside potential (and even more if CSM's production volumes prove true)."

The analysts noted that TRW Automotive Holdings' 4th quarter EPS of $1.40 was far above consensus estimate of 76 cents per share and JP Morgan's 90 cent per share estimate.

They said that there was reason to believe that, going forward, TRW Automotive Holdings was continuing to issue conservative guidance.