Over 2015-19, ADNT was valued at 5.4x trailing adjusted EBITDA and 7.8x on a P/E basis. Our target price of $25 per share reflects better-than-expected performance since Liberation Day and an improving outlook for the industry. Our target assumes 5.0x EBITDA and 7.0x P/E, in line with historical levels, taking an average of the two metrics applied to our 2025-26E assumptions.

The auto industry is capital-intensive, labor-intensive, cyclical, low-growth, competitive, and highly regulated. While industry characteristics limit competitive threats, each presents an added financial risk. Industry demand in the major global markets depends on current economic conditions, which can change unexpectedly and could have a material impact on our earnings assumptions as well as our target price. The high relative fixed cost structure of the industry can lead to material changes in pricing for new and used vehicles as well as components. A material decline in the price structure of the industry could also have a material impact on our financial assumptions. During periods of severe industry recession in the past, many companies in the auto sector were forced to seek bankruptcy protection. If the impact on Adient from any of these factors above proves to be less than we anticipate, the stock could materially outperform our target. Conversely, if the impact on the company from any of these factors proves to be greater than we anticipate, the stock could underperform our target price.