Lear Corp (LEA.N): Reaction Creates Opportunity: Seating Advantage Expanding

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Lear Corp (LEA.N): Reaction Creates Opportunity: Seating Advantage Expanding

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03 Aug 2026 08:59:32 ET │ 20 pages

Lear Corp (LEA.N)

Reaction Creates Opportunity: Seating Advantage Expanding

CITI'S TAKE

LEA reported 2Q 2026 EPS of $4.28 versus $3.47 last year, Citi estimate for

earnings of $3.84, and a FactSet consensus estimate of $3.96 (excluding

unusual items). Better than expected production in NA, new business wins, Buy

FX and commodity recoveries offset lower volume outside NA. Improved Price (31 Jul 26 16:00) US$130.64operating performance was a 40-bps positive to Seating and 155-bps for

E-Systems margin. LEA increased the midpoint of EBITDA guidance 1.4% Target price US$179.00

and increased free cash flow guidance 6.7%. The stock traded 11% lower on Expected share price return 37.0%

comments during the call, which in our view, was an overreaction to early Expected dividend yield 2.4%2027 comments. Similar concerns raised at this point last year proved to be

misplaced. We rate LEA Buy with a $179 target price. Expected total return 39.4%

Market Cap US$6,444M

Leading Seating position to expand — The top four global suppliers generate about

$50 billion annually supplying light vehicle seats. Lear is the leader in revenue and

margin performance, and by our estimation, margin is about 150 bps higher than the

others. We toured Lear’s Rochester Hills Advanced Manufacturing Integration Price Performance

Center, and we believe the cost gap is widening. Lear has gained share relative to its (RIC: LEA.N, BB: LEA US)three largest competitors in five consecutive years, and the manufacturing

efficiencies, in our view, will lead to additional gains over the next few years and

margins will remain well above the others.