UBS Cuts BorgWarner to Sell, Lifts Price Target to $55 on TurboCell Outlook
UBS cut BorgWarner to Sell from Neutral and raised its price target to $55 from $49, arguing about half of the expected TurboCell data center power business upside is already reflected in current valuations. The bank forecasts a 1% decline in core Foundational and eProducts revenue plus a $210 million drop in its battery segment for 2026, offset by $300 million in TurboCell sales in 2027 ramping to $750 million by 2030 in its base case.
1. UBS Rating Change and Price Target Adjustment
UBS downgraded BorgWarner from Neutral to Sell and raised its price target from $49 to $55, stating that roughly 50% of the upside from the new TurboCell data center power unit is already priced into the stock, leaving an additional 10% potential under a best-case scenario.
2. Forecasted Core Business Performance
The bank projects BorgWarner’s core Foundational and eProducts division will see a 1% revenue decline in 2026, while the battery segment is expected to fall by $210 million, reflecting ongoing organic pressures in traditional powertrain markets.
3. TurboCell Revenue Projections
UBS expects TurboCell to generate $300 million in sales by 2027 and ramp to $750 million by 2030 under its base case, versus a bullish scenario of $1.5 billion by 2030, with initial capacity at 2 gigawatts and scope for further expansion as data center demand grows.
4. Execution Risks and Valuation Implications
Key concerns include BorgWarner’s lack of large-scale turbine production experience, limited details on TurboCell pricing and specifications, and a battery component that increases customer costs; the $55 target is based on a 10x multiple of 2027 earnings at the upper end of the stock’s historical range.