AI Stock Memo: LEA - Lear - RankAlpha

LEA

AI Memo

Lear

As of 2026-05-27/Confidence medium

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Data freshness

AI Memo

As of 2026-05-27 • Model: RankAlpha Sentiment Codex

Decision Panel

Action, confidence, horizon, and decision blockers at a glance.

Action

—

Confidence

medium

Horizon

—

Key catalyst

Q1 results showed clear EPS, margin, and cash-flow improvement • 2026-05-01

Expected move: -1%

Biggest risk

The bear case is that volume-driven gains are being offset by selling-price reductions and tariff-recovery reversals, so a weaker OEM backdrop could quickly compress margins again. The packet does not show fresh analyst target revisions, so there is no strong external confirmation of a rerating.

Invalidation

Break below $118 or thesis failure.

What would change my mind?

The Q1 print supports the bull case: revenue grew, diluted EPS rose sharply, segment margins expanded, and operating cash flow improved, while repurchases can magnify EPS if volumes and pricing remain stable. That keeps the multi-quarter setup constructive even without fresh sell-side upgrades.

Research note

Recommendation

—

Confidence

medium

As of

2026-05-27

Base target

$145

p=50%

Bull target

$160

p=25%

Bear target

$118

p=25%

Key bullets

Fast scan of bull, bear, and watch items

BullKey bullets

Pricing pressure and tariff-recovery reversals cap near-term upside
Margin mix and buybacks can support multi-quarter EPS compounding
The Q1 print supports the bull case: revenue grew, diluted EPS rose sharply, segment margins expanded, and operating cash flow improved, while repurchases can magnify EPS if volumes and pricing remain stable.

BearKey bullets

If price pressure persists, buybacks may support EPS less than expected because operating leverage would be doing less of the work.
OEM production or customer mix softness could slow revenue momentum and dilute the Q1 margin gains.
Selling-price reductions and the reversal of tariff recoveries can offset volume leverage and pressure profitability.

WatchKey bullets

Q1 results showed clear EPS, margin, and cash-flow improvement

Summary

High-level snapshot

Recommendation

Model confidence

medium

Timeframe

Asset

Equity

Trigger

Base case: $145 (p=50%)

Bull/Bear spread: +9% / -20%

Vs latest close: Bull +9% · Base -1% · Bear -20%

Scenario probabilities

Bull Target: $160 (p=25%)Base Target: $145 (p=50%)Bear Target: $118 (p=25%)

Commentary

Primary-source evidence is constructive but not euphoric: Q1 operating results improved and capital returns continued, yet tariff-recovery reversal and pricing pressure keep this in monitoring mode rather than a strong bullish call. The packet does not provide analyst revision data or a reliable post-print price move, so conviction should stay moderate even though recent coverage was directionally positive.

As of 2026-05-27 • Updated bi-weekly / post-earningsSource: Internal modelMethodology

Analyst Summary

Thesis highlights from the latest analysis

Bull Case

Bear Case

Drivers

Scannable catalysts and supporting factors

Pricing pressure and tariff-recovery reversals cap near-term upside
Margin mix and buybacks can support multi-quarter EPS compounding

Scenarios

Bull Target (Scenario probability)

$160 / p=25% prob

Base Target (Scenario probability)

$145 / p=50% prob

Bear Target (Scenario probability)

$118 / p=25% prob

Price $147 as of 2026-05-28

Nearest Scenario: Base (∆ 1%)

Targets vs latest close: Bull +9% · Base -1% · Bear -20%

Sentiment & Exposure

News Sentiment (30d)

0.62

Social Sentiment (7d)

0.00

Events

Other notable items detected

EVENT2026-05-01
Q1 results showed clear EPS, margin, and cash-flow improvement
Lear's Q1 2026 net sales were $5.823B, up 5% YoY, diluted EPS was $3.34 vs. $1.49 a year ago, gross margin expanded to 7.7%, and operating cash flow turned positive at $98M; the company also repurchased $75M of stock in the quarter [#10-Q-2026-05-01].
Prob 72.00% • Move 4.50% • Priced-in 60.00%

Short-term Catalysts

Next few weeks

Pricing pressure and tariff-recovery reversals cap near-term upside
2026-06-30
Q1 growth was partly offset by the reversal of certain 2025 tariff recoveries and selling-price reductions, which keeps near-term upside constrained if OEM volumes soften or pricing pressure persists [#10-Q-2026-05-01].
Prob 45% • Move -3% • Priced-in 50%

Long-term Catalysts

Months to a year

Margin mix and buybacks can support multi-quarter EPS compounding
2026-08-31
Seating margin improved to 6.3% from 5.2% and E-Systems margin to 5.2% from 3.9%, while Lear still had about $700M of remaining repurchase authorization; that combination supports a longer-run EPS and FCF compounding case if OEM production stays stable [#10-Q-2026-05-01].
Prob 58% • Move 7% • Priced-in 35%

Risks

If price pressure persists, buybacks may support EPS less than expected because operating leverage would be doing less of the work.
OEM production or customer mix softness could slow revenue momentum and dilute the Q1 margin gains.
Selling-price reductions and the reversal of tariff recoveries can offset volume leverage and pressure profitability.
The business remains cyclical, so any broader macro slowdown could weaken cash generation and capital-return flexibility.

Peers

Symbol	Summary
ALV	Direct auto-supplier peer with similar OEM demand sensitivity and margin-execution readthrough; useful for comparing pricing power and cycle discipline.
GNTX	Relevant auto-content peer with stronger electronics exposure; helpful for judging supplier margins, cash return, and end-market tone.
GTX	Cyclical components peer that is less direct but still useful for readthrough on OEM volume trends and pricing pressure.

Sources

Internal and external references used in this analysis

Model source: RankAlpha Sentiment Codex
Analysis date: 2026-05-27