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JPMorgan rates Dana Overweight with a $40 price target, citing relatively limited exposure to China and EU trade pressures, low insourcing risk and improved non-automotive exposure following its Eaton Mobility transaction.
The divestiture of its Off-Highway business and planned Eaton Mobility combination are reshaping Dana into a broader powertrain supplier serving light vehicles, commercial vehicles and the aftermarket. About 43% of its exposure will come from segments outside light vehicles.
JPMorgan sees potential earnings catalysts from cost synergies, greater commercial-vehicle and aftermarket diversification, and new Ford and Jeep programs, along with potential shareholder returns. The bank said Dana has the widest gap between fundamentals and valuation in its coverage universe.
Dana recently reported second-quarter sales of $2 billion, above expectations. The company raised its full-year sales and free-cash-flow forecasts while lowering its adjusted EPS outlook.
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