BorgWarner Shares Pull Back After Downgrade

NEW YORK (AP) — Shares of BorgWarner Inc. declined on Thursday after an analyst downgraded the auto parts manufacturer, citing concerns that the company could report third-quarter earnings below Wall Street expectations.

Shares fell $1.71, or 5.2 percent, to $31.16 in afternoon trading.

KeyBanc Capital Markets analyst Brett Hoselton cut his rating on BorgWarner to "Hold" from "Buy" in a note to investors. Hoselton said the company may report lower-than-expected earnings for the third quarter after a "disappointing" second-quarter performance.

He also said the company, which makes engineered systems and powertrains, could face other obstacles in the coming quarters, including lower European profitability and sluggish commercial vehicle sales.

"We believe that the negative factors affecting second-quarter and third-quarter earnings could persist for several quarters before dissipating and becoming tail winds in 2010," Hoselton wrote.

In the second quarter, the Auburn Hills, Mich., company lost 5 cents per share after accounting for one-time charges. Hoselton had anticipated profit of 9 cents per share.

He cut his third-quarter estimate to 10 cents per share from 18 cents per share.

Shares of BorgWarner are up more than 50 percent so far this year and have traded between $14.62 and $39.89 in the last 52 weeks.