Piper upgrades Detroit Three carmakers, sees selective upside in parts supplier

Investing.com -- Auto stocks enter 2026 with uneven fundamentals, uncertain demand dynamics and when EV strategies are reassessed and according to Piper Sandler analysts’ valuation gaps are creating selective opportunities.

It is bullish on Detroit Three automakers saying expectations have reset too far.



Stellantis NV (BIT: STLAM) was upgraded to Overweight despite higher exposure to China and weaker profitability in its core U.S. and European markets. Low investor expectations and a discounted valuation create scope for outsized gains if margins improve faster than expected.

General Motors Company (NYSE: GM) was also upgraded to Overweight, given strong earnings power, limited exposure to Chinese competition and significant capacity for share buybacks. It expects cash generation to remain robust, supporting further estimate upgrades.

Ford Motor Company (NYSE: F) was upgraded as well, with the broker highlighting management’s pullback from unprofitable early generation EVs.

Piper Sandler said the shift allows Ford to focus on margin improvement through 2026 and 2027, supported by better vehicle mix and lower warranty costs, ahead of the launch of its next generation EV platform.

There is limited upside in some suppliers where steady execution is already reflected in share prices, while arguing that several automakers now offer attractive risk reward after a period of weak sentiment and earnings disappointment.

Piper Sandler downgraded BorgWarner Inc (NYSE: BWA) to Neutral, citing valuation rather than fundamentals. The stock no longer offers enough upside to justify a more positive stance, even though the supplier remains well positioned to grow revenue modestly across different powertrain outcomes.

Whereas Aptiv was upgraded to Overweight and is called top auto supplier idea for 2026. According to PS Aptiv’s strategy has become more pragmatic, with more realistic growth targets and clearer value creation.

The stock as attractively priced on a sum of the parts basis ahead of its planned split into two listed entities, which could act as a catalyst.

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