Magna International's Earnings Estimates Cut on Lower Vehicle Demand

Deutsche Bank has cut its earnings estimates and price target on Magna International Inc. (MGA) due to lower forecasted vehicle demand in North America and Europe.

Analyst Rod Lache reduced his 2008 and 2009 estimates to $5.86 and $5.42 from $6.60 and $7.15, respectively, while his price target moves to $54 per share from $72. He rates Magna at “hold.”

Despite a decline of 20% year-to-date and Wednesday’s move by Deutsche Bank, shares of North America’s largest auto-parts maker have rallied roughly 10% in the past week. This comes despite Goldman Sachs’ decision to add it to its Conviction Sell list on July 11 due to its exposure the to economically sensitive Big Three U.S. automakers.

Mr. Lache now expects U.S. auto demand will come in at 14 million in 2008 versus 14.5 million previously. His North American production forecast was also cut to 13.1 million from 13.4 million.

He told clients:

This forecast is consistent with the Greenspan/Cohen econometric U.S. auto demand model, as well as the 8 leading indicators that we have frequently referred to in previous research reports.

Update:

Magna shares fell nearly 5% on Thursday morning as Ford Motor Co. (F) announced a major shift in strategy.