NEW YORK—Shares of Lear Corp. soared Tuesday after the auto supplier reported a 57 percent jump in first-quarter profit and backed its full-year profit outlook.
The Southfield, Mich.-based company's profit of 64 cents per share beat average Wall Street predictions of 48 cents per share. Sales fell but still came in ahead of average analysts' estimates.
Lear also boosted its 2008 sales guidance to $15.5 billion, up from $15 billion, largely as a result of the weak U.S. dollar. Analysts expect sales of $14.8 billion.
Standard & Poor's raised its rating for Lear to "Buy" from "Hold," citing the company's better-than-expected margins.
"We see positive international contributions, foreign exchange effects, and restructuring and costs savings outweighing our weaker 2008 domestic outlook," S&P Analyst Efraim Levy said.
Several other analysts backed their highest ratings for Lear, citing the first-quarter results and guidance.
Mark B. Warnsman of Calyon Securities backed his "Add" rating and $42 price target for Lear, attributing the revenue decline to the sale of the company's interiors business and calculating a core sales increase of 2 percent.
Warnsman also pointed to the company's 19-basis-point expansion in segment margins.
"The margin expansion indicates that Lear's restructuring and general cost cutting actions are outpacing negotiated price reductions, in our view," Warnsman wrote in a note to investors.
Baird's David Leiker backed his "Outperform" rating for Lear, adding that he expects to raise his earnings estimates for the company in light of the results.
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