November 15, 2018 / 12:06 PM / 4 months ago

BUZZ-U.S. auto suppliers: Risks remain in uncertain environment - Morgan Stanley

** Morgan Stanley says limited support for U.S. auto supplier stocks until more clarity around China; cuts PTs on U.S. auto suppliers by about 20 pct

** MS says following disappointing Q3 results, most US auto suppliers have lowered guidance for 2018 largely due to lower production volumes in China and Europe

** Says guidance for China varying from down double digits in 4Q18 to “expect the year to end reasonably well”

** Management teams providing color into 2019 cautioned 1H19 and suggested global production in 2019 may be “flat to down”

** MS says applying an additional discount to target multiple given the recent softness in production volumes and uncertain environment in China

** China sends written response to U.S. trade reform demands, a move that could trigger more formal negotiations to resolve a trade war between the world’s top economies

** Cuts PT about 4-20 pct including Adient Plc to $20 from $43; Tenneco Inc to $30 from $40; Visteon Corp to $70 from $98; Magna International to $44 from $48 and Aptiv Plc to $72 from $81

** However, MS raises PT on American Axle & Manufacturing Holdings to $22 from $18; BorgWarner Inc to $61 from $55; Lear Corp to $214 from $186 (Reporting by Rachit Vats)

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