Analyst Note| Richard Hilgert |
No-moat-rated Faurecia reduced its 2021 guidance after IHS Markit--an industry forecaster and consultancy that Faurecia says is its reference for the industry--dropped its European auto production forecast by 13% (or 1.0 million units) for the second half of the year, to roughly 6.8 million from about 7.8 million, due to the continuing microchip shortage, which has made Faurecia’s customers’ production schedules more sporadic. Although this had a minor impact on our valuation model, we are maintaining our EUR 58 fair value estimate. We continue to assume a Jan. 1, 2022, closing for the Hella acquisition. Please see our Aug. 16 Faurecia note for details on that acquisition. The 4-star-rated shares currently trade at an attractive 34% discount to our fair value estimate.