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Major automakers posted September U.S. sales that were slightly
lower than a year ago, despite big consumer discounts, as pickup
truck volumes fell for both General Motors Co <GM.N> and Ford
Motor Co <F.N>.
"The US auto cycle peaked in 2015 and is currently being held at
a plateaued level by increasing OEM incentives," analysts David
Tamberrino and Mariel Kennedy wrote in a note.
The analysts said they expected seasonally adjusted annualized
rate (SAAR) to hold steady from current levels into next year,
followed by a gradual decline.
The brokerage downgraded Tesla Motors Inc <TSLA.O> to "neutral"
from "buy" and cut its price target to $185 from $240.
The analysts said any delay in the timeline for the launch of
the electric carmaker's much-hyped Model 3 would hurt shares.
They also cited Tesla's deal to buy SolarCity Corp <SCTY.O> as a
concern.
"Combination of Tesla and SolarCity – two high growth, high cash
burn businesses, creates a higher risk entity," the analysts
wrote.
Tesla's shares were down 2.65 percent at $202.93 in premarket
trading on Thursday.
The analysts were neutral on Detroit carmakers Ford and GM,
saying dividend yields are a cushion and not at risk over the
next 12 months.
Shares of both companies were untraded premarket.
The brokerage downgraded auto part suppliers Lear Corp <LEA.N>
and BorgWarner Inc <BWA.N>. Lear's rating was cut to "sell" from
"neutral", while BorgWarner was downgraded to "neutral" from
"buy".
However, the brokerage said suppliers who had more international
profit exposure could see earnings hold up longer, maintaining a
"buy" rating on Lear's rival Delphi Automotive Plc <DLPH.N>.
(Reporting by Shashwat Awasthi in Bengaluru; Editing by Sriraj
Kalluvila)
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