Freedom Broker initiates on mid-cap Toyota supplier Gentex with 'buy'

In a note seen by Oninvest, Freedom Broker has initiated coverage of Gentex Corporation, a leading global supplier of auto-dimming electrochromic rearview mirrors and a partner to Toyota Motor Corporation and Volkswagen AG. The analysts point to improving business profitability and opportunities outside of the company’s core mirror segment as key drivers of upside.

Freedom Broker has initiated on Gentex with a “buy” rating and a target price of $28 per share, implying nearly 30% upside versus the stock’s closing price on Tuesday.

Gentex shares offer solid upside, supported by a recovery in margins and the generation of strong cash flow, Freedom said.

Reporting at the end of January for the fourth quarter, the company said the consolidated gross margin increased 2.3 percentage points year over year to 34.8%. The gross margin excluding VOXX International – a supplier of automotive and consumer electronics acquired in 2025 – improved 3.0 percentage points to 35.5%, the highest quarterly level since early 2021, Gentex CEO Steve Downing pointed out. He added that “the steady improvement in gross margin reflects the Company’s disciplined focus on cost control, productivity, and execution.”

At the same time, Gentex’s revenue for the period rose 19% to $644.4 million, driven primarily by the contribution from VOXX.

Gentex holds a strong position in its core automotive mirror market, while its growth prospects are tied to new products such as full display mirrors and driver-monitoring systems, according to Freedom.

For example, features integrated into its mirrors enable connectivity with HomeLink, an in-vehicle wireless system that effectively functions as a remote control for garage doors, security systems, and home lighting, while the Full Display Mirror system helps monitor blind spots.

Among Gentex’s largest customers, Freedom highlights Toyota Motor Corporation, Volkswagen AG, and General Motors. In addition to automotive products, the company produces dimmable aircraft windows, fire protection systems, medical devices, and biometric products.

Freedom identifies key risks to the company’s outlook like its heavy dependence on the automotive sector, trade tensions between the U.S. and China, and competition from other manufacturers.

Since the start of the year, Gentex shares have declined 7%.

Wall Street is split on the stock: five analysts recommend "buy," while five advise "hold." The average target price stands at $26.14 per share, implying about 21% upside.