Magna initiated with a Neutral at UBS

UBS analyst Joseph Spak initiated coverage of Magna with a Neutral rating and $63 price target as part of a broader research note on U.S. Autos, Auto Parts, and Auto-Tech names. The group at large has sold off owing in part to uncertainty around the UAW-D3 labor negotiations, but the firm’s analysis suggests that on average, about 4 weeks of a strike at each of the D3 companies has been priced in, and if a strike occurs, it too will pass, the analyst tells investors in a research note. Sector margins should improve on higher volume, and while a return to prior peak levels is unlikely given costs, execution risk and investment, the recent sell-off better accounts for these potential mid-term challenges, the firm added.