CRT Downgrades BorgWarner To Neutral

CRT issued a company report on BorgWarner, Inc. (NYSE: BWA) after the company reported financial results that were below expectations for the fourth quarter. The firm downgraded BorgWarner from Buy to Neutral and issued a $40 price target.

Analysts Michael Ward and Ali Faghri wrote, "BorgWarner is among the best positioned global suppliers to capture growth from a move towards a cleaner, more efficient drivetrain on a global basis...The adverse impact of currency, lower volumes and program timing were cited as the main reasons for the adjustment."

CRT highlighted two reasons why they downgraded BorgWarner.

Industry demand

Analysts noted that planned new business for 2016-2017 was cut by 60 percent to a range of $640 million to $980 million, as the company is facing challenges of a weaker global economy and lessening demand for its automotive parts and supplies.

Growth

BorgWarner reported $8 billion of revenue in 2015, down 3.4 percent from the previous year. The company is highly exposed to swings in currency, which analysts believe will continue to serve as a primary challenge for the company, particularly as it works to accelerate top-line growth through acquisitions of firms such as Remy International, which was completed in November of 2015.