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The overall outlook for the auto industry has changed since January, according to analysts John Murphy, Aileen Smith and TT Fletcher of Bank of America Securities. Although the analyst team expected stocks in the sector to be volatile when they released the January report, they also found that “our coverage universe over a multi-year horizon was still [remaining] relatively favorable. »

In a new report released Wednesday morning, they state that “2022 is not turning out to be the stabilization/inflection year that many were hoping for, but is worse with ongoing supply chain issues and production constraints further exacerbated by geopolitical tensions emanating from the invasion of Ukraine and further new COVID resurgences/restrictions outside of Asia/China.

Analysts now expect U.S. sales for 2022 to total 13.9 million units, down from 14.55 million in 2021, a decline of 7%. North American production is now forecast at 13.56 million units, down 10% from the previous estimate of 14.15 million units. They say it is “increasingly evident…that supply is the most notable headwind to the V-shaped recovery the industry has enjoyed since the mid-2020 low, not demand” .

Here’s a look at six companies in BofA’s coverage universe that got rating or price target changes Wednesday morning.

Adient

Spun off from Johnson Controls in 2016, Adient PLC (NYSE: ADNT) is a supplier of seats for cars, light trucks and commercial vehicles. BofA writes that the company is “now beginning to demonstrate progress in its turnaround and restructuring efforts, but [has been] recently challenged by COVID disruptions. The stock has moved from Underperform to Neutral and the price target is $47.

The stock traded down around 3.5% late Wednesday morning at $34.87, implying nearly 35% upside potential based on BofA’s price target. Analysts note that the price target “is based on an EV/EBITDA [enterprise value/EBITDA) multiple of roughly 6x on our FY2023 estimates, which reflects a more mid-cycle supplier average multiple on a more trend volume/revenue level.”

Lear

Lear Corp. (NYSE: LEA) is another supplier of automotive seating systems, as well as other electrical components to automakers. BofA’s analysts call it “one of the best operators among seating suppliers” and “well-positioned … due to its leverage to industry mega-trends of electrification and connectivity through its E-Systems segment.” The shares were upgraded from Underperform to Buy and the price objective was lifted from $150 to $195.

Shares traded down about 1.6% Wednesday morning at $131.40, in a 52-week range of $127.91 to $204.91. Based on BofA’s price objective, the upside potential based on the current price is 48.4%. The analysts say the price objective “is based on an EV/EBITDA multiple of roughly 6.5x on our 2023 estimates, which reflects a more mid-cycle supplier average multiple on a more trend volume/revenue level.”

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Visteon

Visteon Corp. (NASDAQ: VC) designs and manufactures electronics and connected-car solutions that it then supplies to automakers. BofA’s analysts have upgraded the stock from Underperform to Neutral and raised their $122 price objective to $140. The rating is based on valuation “as the company trades at a meaningful premium to other suppliers despite financial performance (above-market growth, margins, returns, etc.) that is less impressive.”

The stock traded up slightly more than 1% Wednesday morning, at $99.47 in a 52-week range of $91.59 to $134.57. At BofA’s price objective, the upside potential is 40.7%. Visteon’s price objective “is based on an EV/EBITDA multiple of 12x on our 2023 estimates … [which is] towards the middle of [Visteon’s] historical range (4-16x) since 2011, although the stock has traded up to 18x+. Analysts note that the current trade multiple for vendors in BofA coverage is seven times.