Magna International (TSE:MG) fell on Wednesday after CIBC downgraded North America’s largest auto-parts supplier in the wake of the Volkswagen emissions scandal.
Shares were trading at $61.06, down 2.1%, at 1:07 p.m. in Toronto.
CIBC lowered the stock to “sector perform” from “sector outperform” and cut its target price to $52 from $62.50.
Analyst Todd Coupland noted that Magna doesn’t make diesel engines, but it does make many parts that end up in VW vehicles.
Magna’s VW sales were $4.26bn in 2014, $3.6bn of which were in Europe.
VW’s emissions rigging scandal continues to broaden. Chief executive officer Martin Winterkorn resigned on Wednesday as the automaker admitted that as many as 11 million cars could be affected.
Since 48% of VW’s European vehicle sales are diesel, Coupland assumes the same ratio applies to Magna. That works out to an estimated $1.75bn of sales in 2014.
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