UBS Warburg downgraded Lear Corp. (LEA) and Borg Warner (BWA) to hold from buy.
Analyst Rob Hinchliffe says his downgrades are based on valuation. He notes Lear is trading at 5.7 times its enterprise value/EBITDA based on his 2003 estimate -- near the mid-point of its range of five to seven times. He also says Borg Warner is trading at 6.5 times its enterprise value/EBITDA based on 2003 estimates -- at the high end of its historical range of 4.5 to 6.5 times.
For Lear, Hinchliffe maintains his $4.00 2002 earnings per share estimate, and keeps his $4.85 2003 EPS estimate, as well as his $55 target. For Borg Warner, Hinchliffe keeps his $5.50 2002 EPS estimate, his $6.10 2003 EPS estimate and his $70 target.