Citi Upgrades Forvia to 'Buy,' Citing Overdone Stock Decline

Citi Research has upgraded its rating for automotive supplier Forvia to "Buy" from "Neutral," while maintaining its price target of €12. Analysts at the firm suggest that the stock's recent pullback is "overdone" and that a significant amount of negative news is already reflected in its current valuation, pointing to the company's approximately 30% free cash flow yield as evidence.

The upgrade comes as Citi initiates a 30-day "positive catalyst watch" for Forvia ahead of its first-half results announcement on July 31. The bank anticipates that a reaffirmation of the company's full-year guidance will act as a key driver for the stock's recovery. Forvia's shares have fallen about 38% since February, a drop Citi attributes to broader market factors rather than company-specific issues.

Despite the stock's recent performance, Citi highlighted several positive developments at Forvia this year. The company presented a strategic roadmap at its Capital Markets Day, completed the sale of its interior business for €1.82 billion, and remains on track to reduce its net debt to adjusted EBITDA ratio to approximately 1.5 times by the end of the year.

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The report noted that the auto supply sector has faced several challenges in 2026, including geopolitical uncertainty, restructuring among European automakers, and concerns over future chip availability. According to Citi, while some of Forvia's peers trade near pre-conflict levels, Forvia's stock remains down approximately 30%.

Citi's forecast for Forvia's first-half 2026 includes sales of €10.3 billion and an EBIT margin of 5.8%. The bank believes this performance should allow management to confirm its full-year guidance for an EBIT margin between 6% and 6.5%.