-- CIBC Capital Markets maintained its outperformer rating on the shares of Linamar (LNR.TO) and raised its price target to C$110.00 from C$105.00 on Wednesday, after the company reported first-quarter results.
Q1 results were "well above expectations," and apart from the impact of Section 232 tariff changes, performance is "tracking ahead" of LNR's original outlook, said CIBC.
"Incremental tariff impacts drove a reduction in Industrial and consolidated margin guidance, though a stronger sales outlook in both segments drives our AOI forecast modestly higher, bringing our price target to $110 (from $105)," said CIBC. "We view this as likely a temporary impairment of earnings rather than a permanent one, and overall LNR's results point to a fundamentally healthy business that is executing well. Valuation remains attractive (3.8x CIBC 2026E EBITDA) and we stay Outperformer-rated."
Strong Mobility sales growth was driven by recent acquisitions, launching activity, and volume growth on existing programs, stated CIBC. "Management continues to see many potential distressed M&A opportunities, particularly in Europe," noted CIBC.
Industrial segment outperformance was primarily driven by continued share gains in Skyjack , where volumes were +66% Y/Y driven by innovation and demand from AI-related construction projects, said CIBC. "Ag continued to decline amid weak farmer sentiment, though the company noted pent-up demand, more balanced dealer inventory levels, and potential H2 catalysts from relief payments," further noted CIBC. "LNR expects modest growth in Access markets in 2026/2027, while N.A. Agricultural markets are expected to be down 15%-20% in 2026."
Changes to Section 232 steel/aluminum tariffs are "negatively impacting" Industrial margins starting in the second quarter, but there is no impact to Mobility, said CIBC. CIBC has estimated a ~300bps headwind to segment margins, though this is uncertain and likely a moving target.
"Guidance reflects mitigation steps already in-place, but LNR continues to explore a variety of alternatives," added CIBC. "The focus is on low-cost, low-effort actions, and LNR is not looking at moving production."
Price: $96.50, Change: $+5.84, Percent Change: +6.44%