On Thursday, BMO Capital Markets expressed a positive outlook on Linamar Corp (TSX:LNR) (OTC:LIMAF) shares, increasing the price target to C$90 from the previous C$80, while maintaining an Outperform rating on the stock.
The firm's assessment highlighted Linamar's automotive segment, which has shown a robust performance with a second consecutive quarter of exceeding margin expectations after a tough 2023.
The Industrial segment's agricultural business of Linamar also outshone its competitors in the first quarter of 2024, which the firm attributes to larger-than-expected global market share gains.
However, BMO Capital Markets is keeping a watchful eye on the Skyjack division due to potential challenges from competitors expanding their production facilities later in the year.
The firm's analyst cited the favorable trajectory of the auto margin as a key factor in maintaining the Outperform rating on Linamar's shares. The new price target of C$90 is based on a target multiple of 4.2 times the firm's estimated 2025 EBITDA.
Linamar Corp, with its dual focus on manufacturing in both the automotive and industrial sectors, has evidently navigated past challenges and is now experiencing a period of financial strength, as indicated by its recent performance. The company's success in the agricultural equipment sector, in particular, has set it apart from its peers in the first quarter of 2024.
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