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,
which UBS previously rated as sell, now has a buy rating; General Motors
GM,
which was neutral, also is now a buy. Tesla
TSLA,
was kept at neutral.
Most of the other companies weren’t previously rated: Aptiv
APTV,
Mobileye
MBLY,
and Borgwarner
BWA,
were rated buy; while American Axle
AXL,
Visteon
VC,
Adient
ADNT,
Rivian
RIVN,
Magna
MGA,
Dana
DAN,
and Lear
LEA,
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.
