Auto-Parts Stocks Slide as BofA Trims Car-Sales Outlook

  • Analyst report also downgrades ratings for five suppliers
  • American Axle’s shares tumble most intraday since January

The shares of U.S. auto-parts makers including American Axle & Manufacturing Holdings Inc. and BorgWarner Inc. fell after Bank of America Corp. trimmed its annual estimates for car sales and cut the ratings of some suppliers.

U.S. sales of cars and light trucks this year will reach 17.7 million, Bank of America analysts led by John Murphy said in report to clients Tuesday. While that would be a record year, it was down from an earlier outlook of 18.2 million. Bank of America cut its ratings to neutral from buy for BorgWarner, American Axle, Lear Corp. and Metaldyne Performance Group Inc. and to underperform from neutral for Cooper-Standard Holdings Inc.

The analysts also reduced their estimate for next year’s deliveries to 17.9 million from 19.1 million and 2018’s sales peak to 18 million from 20 million.

American Axle declined as much as 7.7 percent to $15.18, its steepest intraday drop since Jan. 13. BorgWarner slid as much as 5 percent to $32.99. Lear fell as much as 4 percent to $112.79. Metaldyne’s decrease was as much as 7.4 percent to $15.30 and Cooper-Standard’s was as much as 4.8 percent to $81.28.

Kevin Tynan, a Bloomberg Intelligence analyst, said that parts demand may be delayed because while there are more cars on the road and miles driven are increasing, average vehicle age is flattening and might start to decline modestly.

“So in the intermediate to long term, the fundamentals are good that there will be more vehicles in the U.S. fleet, but they will take a few years to get in the sweet spot of maintenance needs seven years out,” Tynan said.

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