NEW YORK (AP) â¿¿ Reduced expectations for U.S. auto sales in 2012 stemming from economic uncertainty led a Jefferies analyst on Wednesday to cut his price targets and earnings estimates for nearly a dozen automotive companies.
Analyst H. Peter Nesvold said he now expects U.S. sales of 12.7 million vehicles in 2012, down from his previous prediction of between 13.5 million and 13.7 million. The new prediction is based on an expectation of real gross domestic product growth of 1.5 percent to 2 percent for the year and an unemployment rate of 9.2 percent, he said.
"While the financial markets have retraced much of their month-to-date losses in recent sessions, downside risks to our previous 2012 outlook have been building," Nesvold wrote in a note to investors. "We feel it prudent to at least reset the bar at levels that at this time look more aligned with a 'base case' rather than 'optimistic case' scenario."
The analyst's 2012 production estimate was slightly higher than the sales prediction at 12.9 million vehicles, in part to account for expectations of a slight increase in inventories ahead of a stronger sales year in 2013. Nesvold also cut his 2012 European production forecast to 19.3 million vehicles from 19.6 million.Nesvold cut his price targets for "Buy"-rated Ford Motor Co. and "Hold"-rated General Motors Co. both by $4, to $15 and $29, respectively. He also cut price targets for "Buy"-rated auto suppliers Dana Holding Corp., Lear Corp., Tenneco Inc. and TRW Automotive Holdings Corp. by between $4 and $8 each. Among "Hold"-rated auto suppliers, Nesvold cut price targets for Autoliv Inc., American Axle & Manufacturing Holdings Inc., BorgWarner Inc., Gentex Corp. and Johnson Controls Inc. In addition, Nesvold said he cut his 2012 earnings estimates for the group of 11 companies by an average of 8.4 percent to levels about 7.4 percent below average analyst expectations.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV