ADNT Stock Recovering Due to Debt Refinancing

ADNT Stock

ADNT stock had a forgettable start to 2019 after it emerged that the sales of auto parts were going to decline this year. However, Adient PLC (NYSE:ADNT), the world’s biggest manufacturer of auto seats, has managed to make an excellent comeback after enjoying a superb rally in the past two six weeks, which saw the stock appreciate by as much as 78.2%. The reason behind the astonishing surge is due to a series of positive analyst’s upgrades.

Moreover, Adient was also able to refinance its debt and that now gives the company a lot of legroom to further concentrate on its core business.

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ADNT Stock Improvement – Key Drivers

The upgrades from well known analysts were the biggest trigger behind the surge in the ADNT stock. It all started with Robert W. Baird’s report in which he upgraded the stock to neutral from underperform and on 12 April, John Murphy of Bank of America Merill Lynch took it a step further as he gave ADNT stock a buy rating.

Murphy moved Adient stock to buy from neutral and also put a target price of $25 on the stock. His earlier target price was $19. Murphy’s report stated that the company was in the process of refinancing its debt and addressing the cash crunch that had afflicted it for some time. Soon enough, the stock started climbing.

>> Analyst Upgrades See ADNT Stock Jump

ADNT Stock Refinancing sees Further Boost

The real push for ADNT stock came after Adient secured a deal for refinancing to the tune of $750 million through an offering of secured notes. The notes are going to be due in 2026 and needless to say, it gives the company the bandwidth to surge ahead with its business without worrying about liquidity. However, better news was in store as the company is expected to have positive cash flow through a verity of reasons primarily related to lower costs.

Despite the recent rally, it is necessary to keep in mind that ADNT stock in Q1 2019 is still down by a whopping 62% and a lot of work is still to be done by the management if it is to have long term success.

However, there is a growing belief that the current management is going to be able to significantly improve the company’s business operations and successfully complete a restructuring. ADNT stock trades at just 0.137 times sales, well below the 0.462 times multiple of seating rival Lear.