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What's Moving Adient Shares 10% Higher Monday?

By Daniel Miller – Apr 1, 2019 at 5:55PM

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An analyst upgrade for Adient and a strong fourth-quarter report from another auto supplier helped fuel a broader rally Monday.

What happened?

Shares of Adient PLC (ADNT -0.10%), a global leader in automotive seating operating roughly 238 manufacturing and assembly plants in 34 countries, are up more than 10% Monday afternoon, following a broader auto-parts stocks rally and analyst upgrade.

So what

Part of the driving force behind the auto-parts rally was likely SORL Auto (SORL), which posted fourth-quarter revenue of $123.2 million, a significant $18.35 million higher than analysts' estimates. Although its bottom line slightly missed estimates, its top-line growth, increased gross margin, and expanding customer base were enough to help spark a rally amid an up day for the broader markets.

Interior of a modern car, showing the front seats and dashboard

Image source: Getty Images.

Another driving force behind Adient's gain Monday was an upgrade from Robert W. Baird, moving Adient from underperform to neutral with a price target of $13.22. This still suggests potential downside from the stock's Monday trading range of $13.46 per share to $14.57 per share (as of 3:25 p.m. EDT), despite being an "upgrade."

Now what

ADNT Chart

ADNT data by YCharts.

It's been a rough run for shareholders since Adient was spun off from Johnson Controls in late 2016. But the company has a strong position in the global seating market, with nearly 40% market share in North America and Europe, and a strong 45% share in China. There's plenty of doom and gloom going around the automotive industry at the moment, and that's weighed on the stock, but it trades at a paltry 4.4 times the consensus estimate for forward earnings. The company will likely remain important: Global automakers need suppliers that can deliver consistently on short notice to match demand.

Daniel Miller has no position in any of the stocks mentioned. The Motley Fool owns shares of Johnson Controls. The Motley Fool recommends Adient. The Motley Fool has a disclosure policy.

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Adient Stock Quote
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