On Friday, CFRA analyst Garrett Nelson increased the price target for Dana Holding (NYSE:DAN) shares to $10.00, up from the previous $10.00, while maintaining a Sell rating on the stock. Nelson justified the adjustment based on a forward P/E of 8.3x, which he considers a significant but warranted discount to historical averages. According to InvestingPro data, the stock has shown strong momentum with a 14.5% return over the past six months, despite its relatively high volatility with a beta of 2.3. Despite the price target hike, the analyst held steady on the 2024 adjusted earnings per share (EPS) estimate of $0.80 and raised the 2025 forecast to $1.20 from the prior $1.00.
Dana Holding unveiled preliminary results for the year 2024 earlier today and issued its initial outlook for 2025. The company anticipates 2025 sales to be between $9.525 billion and $10.025 billion, with adjusted EBITDA ranging from $925 million to $1.025 billion, and free cash flow projected at $175 million to $275 million. InvestingPro analysis reveals that while the company currently maintains a 'Fair' overall financial health score, its gross profit margin stands at just 8.69%, supporting some analyst concerns. Discover more insights with InvestingPro's comprehensive research report, covering 1,400+ US stocks including Dana Holding. These figures surpass current consensus estimates which are set at $9.83 billion in sales, $840 million in adjusted EBITDA, and $142 million in free cash flow.
The company reported that its full-year 2024 sales and adjusted EBITDA were roughly $10.3 billion and $885 million, respectively, aligning with consensus expectations. Although Dana Holding's shares experienced a boost following the positive guidance, the CFRA analyst expressed skepticism about the company's ability to meet these targets, citing industry challenges and the company's historical difficulty in fulfilling its guidance.
Nelson pointed out persistent concerns about Dana Holding's relatively low margins and free cash flow, as well as its higher leverage ratios. He recommended investors to focus on higher-quality names within the auto supplier sector. InvestingPro data shows a debt-to-equity ratio of 2.02 and a current ratio of 1.49, though the company has maintained dividend payments for 13 consecutive years, demonstrating some financial stability despite these challenges.
In other recent news, Dana Inc. has provided its 2025 financial targets, projecting sales between $9.525 to $10.025 billion and adjusted EBITDA of $925 to $1,025 million, which would result in an approximate margin of 10.0% at the midpoint. The company also expects a free cash flow of $175 to $275 million for 2025, driven by cost-saving actions totaling $175 million and increased operational efficiency. In addition, Dana is reorganizing its structure into two segments: Light Vehicle Systems and Commercial Vehicle Systems, following the proposed sale of its Off-Highway business, expected to reduce leverage and return capital to shareholders. Dana also reported a third-quarter revenue of $2.476 billion and announced significant board changes. Analyst firms UBS, Deutsche Bank (ETR:DBKGn), and Barclays (LON:BARC) upgraded Dana's stock from Neutral to Buy, while JPMorgan reduced its price target for Dana, maintaining an Overweight rating on the stock. These are recent developments investors should consider.
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