This Swiss auto parts maker's stock could soar by 75%, Vontobel says

Published Tue, Jan 23 20246:24 PM EST

Switzerland-listed car parts manufacturer Autoneum's share price could increase by over 70% in the next year, according to Vontobel. The investment bank raised its price target on Autoneum to 215 Swiss francs ($248), representing a potential 74% upside from the current share price of 123.80 francs. The stock also trades on U.S. exchanges. Autoneum manufactures lightweight auto components such as flooring liners for optimal protection against noise and heat. The company supplies parts for BMW , Ford , Renault , Mercedes , GM and Volvo , among others. The Zurich-headquartered bank is optimistic about Autoneum's cash flow improving in 2024 and profit margins rising the following year despite sales growth coming in slightly below expectations. AUT.N-CH 1Y line Global car production rebounded 9.4% in 2023, surpassing pre-pandemic levels at over 90 million vehicles, Vontobel stated. However, Autoneum's organic sales grew only 7.2%, lagging the broader recovery, according to the car parts maker's full-year revenue results, released Monday. The below-average topline growth was attributed to competition from fast-growing Chinese electric vehicle makers in Asia and the company's decision which "prioritizes profitable growth," said Vontobel equity analyst Arben Hasanaj in a note to clients on Jan. 22. The strengthening of the Swiss currency also played a role in the company's earnings. Analysts often recommend that investors maintain exposure to Swiss assets as the country's currency strengthens during crises and provides an effective hedge. CHF= 1Y line When excluding negative currency effects that lowered sales by 7.2%, Autoneum's 2023 revenue was 2.43 billion Swiss francs, meeting the company's own guidance. The April acquisition of German company Borgers Automative in 2023 added around 500 million francs in additional sales. In contrast to Vontobel's bullish outlook, Swiss bank UBS has a neutral view of the stock, with a price target of 110 CHF — 10% below the current share price. UBS analysts have forecast muted global automobile production growth, led by a 7% decline in European auto manufacturing volumes in 2024. This challenging industry environment may limit Autoneum's potential for margin expansion despite the benefits of its integration with Borgers, according to UBS.