Linamar Corp. was upgraded to buy from hold in front of its first-quarter results due out after market close on May 6.
TD Securities analyst Brian Morrison, who also cut his price target around the stock to $86 from $88, expects the Canadian auto-parts manufacturer to satisfy or exceed its financial targets. Also, he believes Linamar’s balance sheet is robust enough to create acquisitions or implement more organic initiatives.
“It\’s our view that Linamar is put to deliver an attractive growth profile that should result in annual consensus expectations being raised,” Morrison told clients. “At this time in the cycle, we feel that development in earnings, instead of multiple expansion, should drive share price appreciation.”
Linamar’s shares have fallen a lot more than six per cent in the past month.
Morrison is forecasting a 23-per-cent sales increase in the company’s power train and driveline segment, and 13-per-cent growth in the industrial segment.
He also highlighted Linamar’s launch book more than $3.4 billion, and the expectation for healthy bidding activity in all of the company’s geographies, particularly Europe, with a fragmented supplier base.