Delphi is the "ugly stub" and has assumedly been thrown out by large cap investors, who don't want to be holding a $5bn spin. DLPH is also an auto company, and everybody hates autos.
Which is great, because there are multiple free options:
Content growth: We have high confidence in their ability to increase content.
Diesel decline: Downside based on -21% YoY for 5 years, perhaps it will not be this bad.
Already discounting a 15m US SAAR and a 20% decline in China auto sales.
We find the risk reward very compelling.
Potential Upside: $106(+95%): Similar to company guidance, which we agree with.
Sensible Downside: $50 (-8%): Based on zero growth over 5 years and a 7% step down in global auto sales.
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