UBS initiated coverage of 13 auto stocks, as the broker said investors should focus on growth opportunities and not a looming strike.
Joseph Spak led an initiation that has occurred as the looming United Auto Workers strike has pressured shares.
Ford Motor Co. F, +1.88%, which UBS previously rated as sell, now has a buy rating; General Motors GM, +2.61%, which was neutral, also is now a buy. Tesla TSLA, -2.23% was kept at neutral. Most of the other companies weren’t previously rated: Aptiv APTV, +2.91%, Mobileye MBLY, -1.47% and Borgwarner BWA, +2.91% were rated buy; while American Axle AXL, +1.44%, Visteon VC, +1.82%, Adient ADNT, +2.47%, Rivian RIVN, +0.73%, Magna MGA, +1.06%, Dana DAN, +2.39% and Lear LEA, +1.54% all were rated neutral.
For the automakers, “contract details will matter, but some level of wage/cost inflation was to be expected,” and for the suppliers, four weeks of a strike at each of the Detroit three automakers has been priced in. For legacy OEMs, peak pricing and ICE/BEV transition concerns are well appreciated and UAW sell-off created more attractive risk/reward profile, the analyst said. Tesla is well-positioned for the long term, but the analyst is waiting for a better entry point.
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