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Wolfe Research Names Ford, Lear as Favorable Picks Ahead of Q2 Auto Earnings
Summary
Analyst firm Wolfe Research has identified Ford, Lear, and TE Connectivity as having positive setups for Q2 earnings, while flagging crowded investor positioning in names like GM and Stellantis.
Wolfe Research has pinpointed several automaker and supplier stocks with favorable risk/reward profiles ahead of second-quarter earnings, highlighting a selective approach for investors in a volatile sector. The firm's analysis, published Monday, comes as the industry grapples with concerns over raw material costs and downward revisions to global vehicle production forecasts.
Favorable Setups for Q2
In a note to clients, Wolfe Research identified Ford Motor Company (F), Lear Corporation (LEA), and TE Connectivity (TEL) as having positive setups going into their respective earnings reports. This outlook follows a volatile period that has seen many auto-related stocks return to first-quarter price levels.
The firm's positive view on these names contrasts with a more cautious stance on Aptiv PLC (APTV) and Vontier Corporation (VNT). The analysis suggests that diminishing investor enthusiasm for non-automotive growth opportunities has also contributed to the sector's recent performance.
Investor Positioning and Surprise Potential
Wolfe Research also flagged several stocks where heavy investor positioning could lead to material price swings. The firm noted that General Motors (GM) and BorgWarner (BWA) are "crowded on the long side," suggesting high expectations that could make their shares vulnerable to a sell-off on any disappointment.
AdConversely, Stellantis N.V. (STLA), Autoliv Inc. (ALV), and Magna International Inc. (MGA) were identified as having significant short interest. This "crowded short" positioning could trigger a sharp rally if these companies report better-than-expected results or guidance.
Wolfe's Top Picks Beyond the Quarter
Looking past the immediate earnings cycle, Wolfe designated General Motors as its preferred pick among the Detroit Three automakers. The firm cited GM's "clearest path to earnings growth through 2027 and beyond," supported by strong free cash flow and capital returns.
Among automotive suppliers, BorgWarner remains Wolfe's top choice, primarily due to expected non-automotive tailwinds. TE Connectivity is also favored for what the firm calls an attractive relative valuation and multiple growth drivers expected in the second half of 2026, including an acceleration in AI-related revenue.
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