Deutsche Bank Positive on Delphi (DLPH) Following Intel/Mobileye Deal

Deutsche Bank analyst Rod Lache reiterated a Buy rating and $88 price target on Delphi Automotive PLC (NYSE: DLPH) after Intel agreed to acquire Mobileye. The analyst believes that this development should be viewed as a positive for Delphi. The impact on other suppliers (Continental, Bosch, Autoliv, Visteon) is less clear.

Lache said the recent deals in the sector (Mobileye at $15 bn, Harman at $8 bn) reinforce their view that there is embedded and unrecognized value within certain Auto Technology companies. He sees particularly significant opportunities in each of Delphi’s three businesses. "Delphi’s Powertrain Division, for example, appears to be particularly underappreciated," he commented. "Even if we assume a zero growth (and we believe this business is poised for growth), and with relatively modest (1%) acquisition synergies, this business could be worth $5.1 bn, or 7x 2017 EBITDA to a strategic buyer. Unlocking this value would also create a pure play in Electronics and Electronic Architectures, which would be noteworthy for Financial and Strategic players alike."

He added, "We continue to believe that DLPH is poised to benefit from compelling secular trends. The company’s new business awards have been growing at a 10%, which we believe implies upside to Street assumptions. We’d note that our DCF derived target of $88 incorporates $250MM of annual BTA impact. Without it our target would be $100."

For an analyst ratings summary and ratings history on Delphi Automotive PLC click here. For more ratings news on Delphi Automotive PLC click here.

Shares of Delphi Automotive PLC closed at $80.20 yesterday.

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