Magna upgraded to Peer Perform from Underperform at Wolfe Research

Wolfe Research upgraded Magna (MGA) to Peer Perform from Underperform. Shares are up 10% since early September following a better than expected guidance cut in Q3 and management’s positive message on capital allocation, including the resumption of buybacks, the analyst tells investors in a research note. While the firm still remains cautious on fundamentals and its concerns about customer mix headwinds in 2025, slower-than-expected scaling of Legacy OEMs EV and ADAS businesses, and long-term competitive pressures remain intact, Magna is in a position to support cash flow by significantly reducing capex and R&D spend in 2025, factors fully within management’s control and could be a $500M+ support to free cash flow, more than offsetting potential declines in underlying EBITDA.