Lear (LEA) Provides Upbeat Outlook & Market Share Targets
Lear Corporation LEA recently made significant announcements during its Seating Product Day. It unveiled an encouraging financial outlook and market share targets and announced its achievements in Thermal Comfort Systems.
Lear raised its projections for 2023 net sales, core operating earnings and free cash flow. The company aims to achieve a net sales range of $22.35-$23.05 billion, higher than the previous guidance of $21.2-$22 billion. Net income is now projected in the band of $620-$720 million in 2023, up from the prior projection of $510-$670 million.
Lear has set ambitious market share targets, striving for a 29% share in JIT seating and a 32% overall Seating market share by 2027. Focused on operational efficiency, Lear expanded the Seating target margin range to 8.5-9.0%, emphasizing its commitment to improving profitability. Seating adjusted earnings are projected to increase approximately $700 million from 2023 to 2027, highlighting the company's dedication to sustainable growth.
With ownership of 259 patent assets dedicated to its groundbreaking FlexAir and modularity technologies, Lear has solidified its position as a pioneering force in automotive seating innovation. Moreover, Lear has raised the bar by setting a higher revenue target of $1 billion for its Thermal Comfort Systems, a significant increase from the previous goal of $800 million, to be achieved by 2027.
Furthermore, Lear announced significant contracts that underscore its strong business relationships and preferred supplier status. The company secured a first-to-market contract to supply INTU products on future vehicle models with an ultra-luxury European automaker. Additionally, Lear was awarded the first production contract for FlexAir on a crossover vehicle launching in 2024 with an Asian automaker, solidifying its position as a trusted partner in the industry.
The company has gained 7.8% in the past year compared with the industry’s 8.2% rise in the same period.
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Zacks Rank & Key Picks
Lear currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the auto space include Allison Transmission Holdings ALSN and General Motors GM, each carrying a Zacks Rank #1 (Strong Buy), and Genuine Parts Company GPC, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Allison Transmission Holdings’ current-year earnings is pegged at $6.61 per share, which has been revised upward by 9% in the past 60 days. The company’s shares have gained around 43.9% over the past year. ALSN delivered a trailing four-quarter earnings surprise of 12.8%, on average.
The Zacks Consensus Estimate for GM’s current-year earnings has been revised 2.3% upward in the past 60 days. In the past four quarters, GM has outperformed earnings expectations in three instances, with an average surprise of 15.5%. The company’s stock has gained 10.3% in the past year.
The Zacks Consensus Estimate for Genuine Parts’ current-year earnings has been revised upward in the past 30 days. The consensus estimate for its current year’s earnings is pegged at $9.07 per share, indicating year-over-year growth of 8.75%. The company’s shares have gained 21.8% in the past year.
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