Prudential Downgrades Auto Parts Sector
Prudential downgraded Gentex (GNTX ), Delphi (DPH ), Lear (LEA ), and Johnson Controls (JCI ) to hold from buy. Prudential also lowered Visteon (VC ) to sell from hold.
Along with those stocks, Prudential lowered its rating on the auto-equipment maker sector to market perform from market outperform. Analyst Michael Bruynesteyn says May sales are likely to disappoint by coming in well below 16.5 million vehicles, likely under 16 million. He says production schedules are expected to be weak when they are announced on June 3.
Bruynesteyn thinks second-quarter EPS will be down year-over-year, and negative news flow will continue into June, while pending UAW agreement will loom over the stocks in the summer.