LEA also slashed its full-year forecast due to the chip shortage
The shares of Lear Corporation (NYSE:LEA) are down 1.9% at $165.59 at last check, after the automotive name reported second-quarter earnings of $2.45 per share -- just 2 cents shy of analysts' estimates -- as well a revenue miss. The company also slashed its full-year forecast, highlighting the lasting impact of the semiconductor shortage.
The security has been chopping lower on the charts since its June 4, three-year high of $204.91. Overhead pressure from the 40-day moving average has been keeping a tight lid on the shares, rejecting a rally to the $178 level earlier this month. Nonetheless, the equity remains up 47.8% year-over-year.
The brokerage bunch is still relatively split towards Lear stock. Of the 13 analysts in question, seven call it a "buy" or better, while the remaining six say "hold." Meanwhile, the 12-month consensus target price of $206.60 is a healthy 23.4% premium to current levels.
The options pits are firmly in the bullish camp, however, with calls popular. This is per LEA's 10-day call/put volume ratio of 6.50 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than 89% of readings from the past year. This means calls are being picked up at a faster-than-usual pace.
From a fundamental point of view, Lear stock has faced a steady decrease in revenue and net income over the past few years. On the top-line, it has seen back-to-back years of revenue declines in 2019 and 2020, while its net income has consistently decreased, too, down 78% since 2017. Plus, the equity is now trading at an extremely high price-earnings ratio of 35.25. Overall, Lear stock is a high-risk investment, but its forward price-earnings ratio of 12.06 makes it a potentially intriguing turnaround play.