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NEW YORK (TheStreet) -- Standard & Poor's has cut its opinion on shares of auto parts supplier ArvinMeritor( ARM) to strong sell from hold.

"Although we are raising our target price by $1 to $12, with the shares above our target price, our opinion is lowered to strong sell on valuation," S&P noted. Still, "We expect ARM to benefit from higher demand and initiate our FY 11 (Sep.) EPS estimate at $0.93, up from a projected $0.27 in FY 10."

Risks to S&P's EPS estimates include a more robust dollar against the euro and greater raw materials costs.

ArvinMeritor stock is down 0.1% at $14.10 in pre-market trading, while peer

TRW Automotive


is flat at $31.40. Meanwhile,


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is down 0.1% to $24.20.

TRW Automotive was among a handful of liquidity ratings for the auto industry upgraded by Moody's in the first quarter as auto sales grew,




(F) - Get Ford Motor Company Report


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were the others. All these companies were upgraded one notch to SGL-2, the second-best liquidity rating,



Meanwhile, S&P expects to see increased demand for commercial vehicles as the U.S. and other economies grow in 2010 and 2011.

Also, leading credit research firm CreditSights noted that industry auto sales in March were strong and that "with an abysmal 1Q09 as an easy frame of reference , the numbers for 1Q10 and March 2010 weigh in with a solid rebound with Ford and


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leading the way."

-- Reported by Andrea Tse in New York

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