ADNT stock is on fire and up over 80% in the past month on multiple upgrades. In fact, the stock went up over 25% in the past week after Adient PLC (NYSE:ADNT), automotive seating supplier, received a third analyst upgrade within a month as well as a vote of confidence that the company will successfully manage to refinance its debt load.
Third Upgrade of Stock in April
In March, ADNT stock had a lousy month with stock value declining by 33% following growing concerns that the automotive market had peaked. The decline was particularly bad news for Adient, owing to its $3.41 billion debt as well as thin margins.
On Friday, analyst John Murphy of Bank of America Merill Lynch upgraded ADNT’s shares from neutral to buy, also increasing his share price target from $19 to $25. In a note, Murphy stated that he believes Adient will soon be in a position to refinance its debt as well as alleviate liquidity concerns thus allowing new CEO Douglas DelGrosso to implement his turnaround plan.
This is the third upgrade that ADNT stock has undergone in April. Robert Baird upgraded ADNT last week from underperform to neutral while RBC upgraded it from underperform to sector perform.
Splitting from Johnson Controls
In 2016, ADNT was spun out of Johnson Controls (NYSE:JCI), and since then the company has had a difficult time, its stock losing over 50%. Adient controls over 40% of automotive seating market share in Europe and North America as well as a considerable percentage in China. However, automotive seating supplies are price sensitive, and as a result, it is hard to extract higher margins from them.
Considering this situation, the new CEO, DelGrosso, has a task of managing the costs as well as extra value from the company’s portfolio. This will be a daunting task for DelGrosso especially if sales are shrinking. However, if ADNT stock manages to refinance its debt, then the CEO will be in a position to execute his plan.
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