BorgWarner has secured a landmark contract with a major global original equipment manufacturer (OEM) to supply its 400-volt High Voltage Coolant Heater (HVCH) systems, which will be used in the automaker’s plug-in hybrid electric vehicles (PHEVs), including mid-size pickup trucks, SUVs, and minivans. Production of these systems is set to begin in 2027. This agreement is BorgWarner’s largest HVCH PHEV contract within North America, underscoring the company’s leadership in advanced automotive technologies.
From a financial perspective, BorgWarner reported approximately $14 billion in revenue for 2024, remaining steady compared to 2023. The company achieved an adjusted operating margin exceeding 10%, surpassing the upper end of its guidance, and recorded adjusted earnings per share (EPS) growth of 15% year-over-year. Free cash flow reached $729 million, representing a 29% increase, outperforming full-year projections. However, fourth-quarter sales slightly declined by 2% year-over-year to $3.4 billion, impacted by reduced volumes in China and a $646 million charge for goodwill and fixed asset impairment linked to delayed battery electric vehicle (BEV) adoption in Western markets.
Looking ahead to 2025, BorgWarner expects sales between $13.4 billion and $14 billion, with an adjusted operating margin forecast of 10% to 10.2%. Adjusted EPS is projected to range from $4.05 to $4.40 per share, while free cash flow is expected to be between $650 million and $750 million. Despite challenges such as lower industry volumes and currency headwinds totaling $410 million, BorgWarner remains optimistic about sustaining strong cash flow and long-term growth through product innovation.
Analysts maintain a positive outlook on BorgWarner’s stock, with an average one-year price target of $34.94, representing an 18.64% upside from the current price of $29.45. GuruFocus estimates place the stock’s fair value at $41.16, suggesting a potential upside of 39.76%. The company’s consensus recommendation from brokerage firms stands at 2.3, indicating an “Outperform” rating.
BorgWarner’s focus on advanced automotive solutions, combined with its financial resilience, positions it well to capitalize on the growing demand for electrified vehicle technologies. The new HVCH contract further strengthens its presence in the North American market, while robust financial metrics and analyst confidence support a promising outlook for investors.