Forvia
Note: This is a daily stock update and the information stands true as of 02/04/25, 09:00 CET.
Company Update:
Expert Opinion:
While we are probably late to the party, we think the downgrade is the right call. We believe the situation going forward will be tricky for the automotive sector and as always the auto parts manufacturers are likely to suffer more. Despite our sharp downgrades of earnings and medium term numbers, our fair value for Forvia implies 10% upside. Valuation is very low but momentum is likely to remain adverse. We think it is too early to jump back in the name.
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Company Update:
We downgrade our estimates and rating on Forvia as we adopt a way more negative scenario on the underlying fundamentals going forward.
Our view is that the auto parts sector is facing structural headwinds: The need for high volumes to achieve robust margins, limited pricing power with OEMs and a high investment level required in electrification and software-defined vehicles to maintain competitiveness. Fragmentation and increased competition from Chinese companies will also hurt.
Forvia is especially at risk with high debt levels, over-exposure to Europe and Western OEMs, ongoing weakness in China, delays in divesting certain non-core activities, and persistent pressure from high interest expenses and restructuring costs.
Overall, we expect Forvia to struggle through an automotive downcycle, exacerbated by the looming risk of a global trade war, which could further strain supply chains and weaken demand.
We have cut our numbers and now expect EPS to be negative in 2025 and 2026 (by €2 and by €1.5 per share respectively).
While we are probably late to the party, we think the downgrade is the right call. We believe the situation going forward will be tricky for the automotive sector and as always the auto parts manufacturers are likely to suffer more. Despite our sharp downgrades of earnings and medium term numbers, our fair value for Forvia implies 10% upside. Valuation is very low but momentum is likely to remain adverse. We think it is too early to jump back in the name.
For daily updates, subscribe to our newsletter and for detailed information, reach out to us at sales@alphavalue.eu
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Alphavalue Morning Market Tip
Solid start of 2025 with signs of recovery in key markets.