What happened
A messy spinoff helped push down the value of automotive supplier BorgWarner's (BWA 1.13%) stock over the past few trading days. This was compounded by an analyst price target cut. According to data compiled by S&P Global Market Intelligence, its price was down by slightly more than 8% week to date as of early Friday morning.
So what
BorgWarner kicked off the week with that spinoff; its onetime fuel systems and aftermarket business is now a separate, publicly traded company known as Phinea. The separation wasn't exactly clean, with certain stock-tracking websites showing a notable post-spinoff price decline for BorgWarner shares.
Although the move is meant to be part of BorgWarner's tighter focus on next-generation auto technology like electric vehicles (EVs), it's possible some investors don't like the jettisoning of a legacy business.
One analyst who might sympathize is Jeffrey Osborne of TD Cowen, who on Thursday reduced his price target on the stock by more than 10%. It now stands at $53 per share from the preceding $59, but despite the chop Osborne maintained his outperform (read: buy) recommendation on BorgWarner stock.
Now what
Professional opinions differ on the new BorgWarner, though. That same day, Bank of America prognosticator John Murphy went in the opposite direction, upping the stock's price target dramatically to $67 per share from $54. On top of that, Murphy lifted his recommendation one peg; it's now a buy where formerly it was neutral.
The analyst's new take was based on current auto industry dynamics, which are improving after a weak 2022 that saw the sector contend with supply chain problems. Those dynamics should improve the fortunes of auto parts suppliers.
