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BorgWarner Inc. (BWA), headquartered in Auburn Hills, Michigan, is a leading automotive supplier that provides solutions for combustion, hybrid, and electric vehicles. With a market cap of $6.3 billion, their offerings cater to original equipment manufacturers (OEMs) of light vehicles comprising passenger cars, SUVs, vans, and light trucks, and commercial vehicles, including medium and heavy-duty trucks and buses.
Companies worth $2 billion or more are generally described as “mid-cap stocks,” and BWA fits right into that category with its market cap exceeding this threshold, reflecting its substantial size, influence, and dominance in the auto parts industry. BWA has established a strong competitive advantage in the industry through its emphasis on electrification, diverse product offerings, worldwide manufacturing presence, and robust research and development capabilities.
Despite its notable strength, BWA slipped 23.8% from its 52-week high of $38.23, achieved on May 14, 2024. Over the past three months, BWA stock fell 7%, underperforming the Dow Jones Industrials Average’s ($DOWI) marginal dip during the same time frame.
In the longer term, shares of BWA declined 17.8% over the past six months and 16.2% over the past 52 weeks, lagging behind DOWI’s six-month marginal gains and 7.8% returns over the last year.
To confirm the bearish trend, BWA has been trading below its 50-day and 200-day moving averages since mid-December, 2024, with slight fluctuations.
BorgWarner's recent challenges in powerdrive and battery & charging systems have led to underperformance, impacted by impairment charges and operational issues. Despite progress in transitioning to electrification, with an 8.6% increase in organic sales for battery & charging systems, impairment charges have remained a persistent issue.
On Feb. 6, BWA shares closed down by 3% after reporting its Q4 results. Its adjusted EPS of $1.01 topped Wall Street expectations of $0.92. The company’s revenue was $3.4 billion, falling short of Wall Street forecasts of $3.5 billion. BWA expects full-year adjusted EPS in the range of $4.05 to $4.40, and expects revenue in the range of $13.4 billion to $14 billion.
BWA’s rival, American Axle & Manufacturing Holdings, Inc. (AXL) shares have lagged behind the stock, with a 36.8% dip over the past six months and 45.1% losses over the past 52 weeks.
Wall Street analysts are moderately bullish on BWA’s prospects. The stock has a consensus “Moderate Buy” rating from the 16 analysts covering it, and the mean price target of $37.33 suggests a potential upside of 28.2% from current price levels.
