Bank of America resumes coverage of Visteon at Buy; 'the auto cycle is favorable for suppliers'
Bank of America has reinstated coverage of auto tech company Visteon Corp (NASDAQ:VC) with a Buy rating and set a 12-month price target for the stock at $180.00.
The reinstatement of Visteon is predicated on BofA’s view that the company is one of the fastest-growing auto suppliers. A belief that is founded on the company's strong connection to major industry trends such as the digitization and electrification of the automotive sector.
“Timing of the global auto cycle is favorable for suppliers. Sales volumes have exceeded expectations in the US and Europe this year,” analysts wrote in a note.
VC has consistently outperformed the market with an average growth rate of 13% since 2020. BofA anticipates this impressive growth trajectory will continue over the next three years. The increasing demand for EVs and the integration of digital technology into vehicle interiors will serve as a steady foundation for Visteon's ongoing expansion.
Additionally, the company's hardware and software offerings, particularly the SmartCore cockpit domain controller and battery management system, are expected to experience substantial growth, projected to increase from $0.5 billion in 2022 to over $1.5 billion by 2026.
However, the UAW strike may harm earnings in the near term. Bank of America's model anticipates a strike lasting 1-2 months, potentially leading to a $10-15 million earnings setback in 2023.
Shares of VC are down 0.30% in early trading Tuesday morning.
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