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Aptiv Lowers 2021 Guidance on Chip Shortage and Lingering COVID-19 Effect; Maintaining $105 FVE

Richard Hilgert Senior Equity Analyst

Analyst Note

| Richard Hilgert |

On Oct. 11, narrow-moat-rated Aptiv reduced 2021 guidance. Due to the microchip shortage and lingering effects of COVID-19, the company sees second-half 2021 global light-vehicle production at 38 million units, down 14% from its prior guidance that had assumed 44 million units. The time value of money since our last update would have added $1 to our fair value estimate, which was offset by changes to our model. However, the 2-star-rated shares of Aptiv currently trade at a 53% premium to our unchanged $105 fair value estimate.

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Company Profile

Business Description

Aptiv’s signal and power solutions segment supplies components and systems that make up a vehicle’s electrical system backbone, including wiring assemblies and harnesses, connectors, electrical centers, and hybrid electrical systems. The advanced safety and user experience segment provides body controls, infotainment and connectivity systems, passive and active safety electronics, advanced driver-assist technologies, and displays, as well as the development of software for these systems. Aptiv's largest customer is General Motors at roughly 13% of revenue, including sales to GM’s Shanghai joint venture. North America and Europe represented approximately 38% and 33% of total 2019 revenue, respectively.

5 Hanover Quay, Grand Canal Dock
Dublin, D02 VY79, Ireland
T +353 12597013
Sector Consumer Cyclical
Industry Auto Parts
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 151,000