Opinions
Jennifer Radman
Delphi Technologies
DLPH-N
TOP PICK
Jan 24, 2018
$56.210
Stock price when the opinion was issued
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Great management team and great prospects. Auto-parts is pretty much a long-term growth business. Attractive area to be in. Historically is pretty highly correlated with housing recovery. At the same time you have emerging-market growth. This company is involved in 3 key areas including 1) fuel efficiency 2) electronic architecture in cars and 3) active safety such as electronic scanning radar for lane departure warning systems, which is still a high margin business. Trades at the discount to the sector because of a pretty ugly history.
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It involves making internal combustion engines as efficient as possible. There has not been as much urgency for companies to implement their components into their cars. There is also the leapfrog effect as we go to electrification of autos. He sees no reason to sell. Long term we need regulations ramping up again to require their components integrated into autos. Electrification could be a risk to this company.
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This has technology that optimizes the powertrain. That’s important, because you have all these regulations that come out on vehicle emissions globally, and thinks this one is being grouped in with the North American peak auto fears, but most of their revenue is from outside of North America, and they have powerful tailwinds from regulatory standards coming out. Also, they make about 5X more on electric vehicles. (Analysts' price target is $60.)