Credit Suisse says there is singular upside in TRW Automotive (NYSE: TRW) notwithstanding rumors of an merger by ZF in new weeks.
“While we consider TRW has one of a some-more engaging expansion stories in a retailer universe… Our DCF investigate suggests satisfactory value of $106/share, implying usually 7% upside from stream levels,” writes researcher Dan Galves.
If a understanding falls apart, shares could tumble to a low $90 level, according to Credit Suisse. The investigate news serve states that this could be an appealing shopping opportunity.
In this case, expansion opportunities embody Chinese growth, augmenting direct for active reserve products (which would boost margins) and serve use of electronic energy steering.
In a shred called, “Makin’ It Rain,” Galves writes about TRW’s money flow.
“If TRW uses some of that money for grant de-risking and/or to compensate EU anti-trust penalties, we still see ~$1.0 bln of additional precedence capacity, that it could use to buyback ~8%-9% of superb shares.”
The $106 cost aim is formed on a DCF that assumes 3 percent depot expansion and 11 percent WACC.
Shares of TRW were final trade 0.13 percent aloft during $99.70 on a upgrade.
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