We reach our target price using a DCF and terminal value calculation, which results in a EUR 16.3. We use 1.5% mid term and 0.5% terminal sales growth and 5.0% mid-term EBIT margin and 4.5% terminal EBIT margins with a WACC of ~8% (Rf: 4.5%, ERP: 1.5%, Beta: 1.6x).

We rate OPMobility High Risk to reflect share price volatility of auto suppliers as a whole, as well as uncertainty (on the upside and downside) around several key top-line and earnings growth drivers. The most pertinent risks to the achievement of our target price are: 1) further LVP downgrades in Europe and North America could require accelerated restructuring and drive negative operating leveraging, likely lowering the dividend outlook, 2) a rapid BEV adoption curve in the US and Europe could drive top-line/FCF declines from lower Fuel tank volumes, 3) Lighting revenues fail to inflect, reducing margin expansion potential, and 4) OEM restructuring drives could see OEM in-housing trends accelerate, with plastic components potentially more at-risk.