Auto parts company Tenneco, Inc. (TEN) has seen strong price appreciation since the beginning of the year. Zacks senior auto industry analyst Paul Raman, CFA explains in his latest report on the company why he feels there is still room for a further upswing:
"Tenneco is witnessing revenue improvements and has been successful in cost reduction efforts and restructuring activities. The company holds a leading position in nearly every product category it offers. Moreover, diversification has proved to be a major positive for the company. We set a six-month target price of $40.00 and rate the shares a Buy.
"The company is a leading auto parts supplier to original equipment manufacturers (OEMs) and the aftermarket. About 77% of sales are for OEMs, while the balance is for the aftermarket. About 23% of sales are to diesel platforms. The company generates roughly an equal amount of revenue from its domestic and global operations.
"The industry has consolidated, which has allowed companies to produce at cheaper points on their average cost curve, due to the economies of scale that have been achieved. Tenneco has a competitive position, due to a strong brand name and reputation, which the company continues to leverage."
Read the full analyst report on TEN
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