Freedom Broker raises TP on Ford and GM supplier Strattec Security for 27+% upside

Freedom Broker has reiterated its "buy" rating while raising its target price by more than 20% on shares of Strattec Security, a small supplier of automotive locks and keys to the likes of Ford, General Motors, and Stellantis, citing expectations of stronger profitability next year despite slowing revenue growth. The new target price of $85 per share offers upside of about 27% above the stock’s August 27 closing price of $66.83 per share. 

The fair value of Strattec shares is now $85 apiece, Freedom Broker argued in a note seen by Oninvest. That is 21% above its previous target price and 27% higher than the company’s closing price of $66.83 per share yesterday. Freedom Broker's recommendation remained unchanged at "buy."

Analysts at Freedom Broker revised their target price after Strattec reported fourth-quarter fiscal-2025 earnings (period ended June 29). The company posted a 6.3% year-over-year increase in net revenue to $152 million. Strattec manufactures automotive components including ignition and door locks, latches, and drive units for door openers. About two thirds of its total revenue came from orders from the “Big Three” automakers, Ford, General Motors, and Stellantis, according to Freedom Broker.

While new car sales were broadly in line with expectations this year, Freedom Broker flagged below-forecast component price growth. That created doubt about a possible slowdown in Strattec’s revenue growth in 2026. Freedom Broker thus lowered its top-line estimate by 2.4% to $588.4 million. This would represent a 4% increase relative to the fiscal-2025 top line ($565 million). A year earlier, revenue increased 5%.

Even so, Freedom Broker expects profitability to improve. Net EPS in the reported quarter, while down year over year, exceeded Freedom Broker's forecast by 34%. “We expected higher operating expenses related to trade restrictions,” it explained. The fourth-quarter results led analysts to raise their 2026 EPS call by more than 78% to $6.20.

Another positive was significant growth in Strattec’s operating cash flow, which rose 54% in the fourth quarter and 484% for the full year. Cash on hand increased 43%, while debt fell 38%.

Strattec shares are up more than 62% year to date. Coverage remains limited: according to MarketWatch, only one other analyst tracks the company, also with a "buy" rating and an $80 per share target price (for almost 20% upside from the last close).

The AI translation of this story was reviewed by a human editor.