Cantor Fitzgerald has initiated coverage on Motorcar Parts of America (NASDAQ:MPAA), a leading supplier in the automotive aftermarket sector, with an Overweight rating and a price target set at $14. The firm's analyst cited the company's decades-long presence as a top supplier of rotating electric aftermarket products and its growing leadership in brake calipers since 2018 as key factors for the positive outlook.
The analyst believes that Motorcar Parts of America's brake calipers business is now reaching a scale that could provide a gross margin tailwind over the medium term, which is defined as a one to three-year period. This development is seen as a significant factor that could enhance the company's financial performance in the near future.
Looking further ahead, the firm anticipates that Motorcar Parts of America's established reputation among leading U.S. automotive parts retailers will enable it to expand its product portfolio into the Brake Pads and Rotors segment. This market is valued at approximately $10 billion, according to Lang Aftermarket's 2024 report. The analyst suggests that this expansion could occur over a longer term, spanning three to five years.
The company's core Rotating Electric business is also highlighted as an asset. The analyst's assessment is that the current valuation of Motorcar Parts of America does not fully account for the gross margin benefits and the potential for market share growth across multiple automotive aftermarket categories that the company is poised to capture.
In summary, the favorable Overweight rating reflects Cantor Fitzgerald's confidence in Motorcar Parts of America's growth trajectory and market position, underpinned by its expanding brake calipers business and opportunities in the broader automotive aftermarket. The $14 price target suggests a positive outlook for the stock's performance.
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