- General Motors (NYSE:GM) fell 2.6% in today's trade following a downgrade from Barclays on the U.S. auto and auto parts sector, saying an extended Chinese slowdown limits upside for vehicle-related stocks.
- Analyst Brian Johnson cuts the sector to Negative from Neutral while downgrading GM, BorgWarner (NYSE:BWA), Delphi Automotive (NYSE:DLPH) and Lear (NYSE:LEA) to Equal Weight from Overweight, expecting recent underperformance to continue as China car sales continue to disappoint and Chinese production turns negative.
- With few catalysts on the horizon, GM is unlikely to enjoy meaningful upside at least the end of the year, Johnson says, adding that GM likely will experience the most severe China headwinds among companies covered by the firm, making an inexpensive valuation and strong dividend "largely irrelevant."
- Johnson says upside potential for BWA and DLPH is limited, as China represents 30%-40% of backlogs for the companies.