THRM – Although management’s confidence about BTM growth implies long-term expectations are far too bearish, their concerns about regional market weakness signal potential near-term headwinds

• Gentherm Incorporated (THRM:USA) currently trades near recent averages relative to UAFRS-based (Uniform) Earnings, with a 12.7x Uniform P/E. At these levels, the market has very bearish expectations for the firm, which suggests a longer-term buying opportunity, given management’s confidence about BTM growth, as well as the firm’s recent performance. That said, management’s concerns about regional market weakness imply near-term equity upside may be limited
• Specifically, although management is confident about growth in the Battery Thermal Management area, they appear concerned about the potential for continued weakness in the North American automotive market. As such, near-term equity upside may be limited