Noah Zivitz

Managing Editor, BNN Bloomberg

Archive

An analyst who tracks major Canadian auto parts manufacturers has cut his view on two of those companies as a result of turmoil caused by Russia’s invasion of Ukraine.

Peter Sklar from BMO Capital Markets downgraded Linamar Corp. and Magna International Inc. to market perform (the equivalent of a hold) from outperform (the equivalent of a buy). He also cut his per-share price targets to $60 (from $97) for Linamar, and US$63 (from US$89) for Magna.

In both cases, Sklar cited four challenges facing Linamar and Magna as hope dwindles for a rapid resolution to Russia’s hostilities: lower vehicle production in Western Europe, higher oil and gas prices, commodity headwinds, and the possibility of palladium and neon supply shortages.

The attack on Ukraine added to an already challenging environment for the automotive industry, which has been wrestling with semiconductor shortages and other supply-chain disruptions that took hold during the pandemic.

Since the start of Russia’s invasion on Feb. 24, shares in Linamar and Magna have lost almost a quarter of their value.