Morgan Stanley upgrades U.S. auto industry view to Attractive from In-Line

Morgan Stanley upgraded the firm’s U.S. auto industry view to Attractive from In-Line with auto manufacturers pivoting to capital efficiency and return after years of peak spending on electric vehicles and autonomous vehicles. The industry has attractive optionality to lower spending, increased collaboration and restructured portfolios, says the analyst, who notes there is 10% upside on average to the price targets across the firm’s U.S. autos coverage. Over the past few months, the firm has seen auto demand trends “strongly support our ICE elongation thesis,” as well as management teams at legacy OEMs being “largely receptive to our capital discipline and cash return thesis,” the analyst tells investors.