Freedom analysts have reaffirmed their Buy recommendation on Motorcar Parts of America (MPAA) and raised the target price to $18 per share. With the current price around $13.2, this implies upside potential of over 36%. Motorcar Parts of America is a U.S. manufacturer of automotive parts and a key supplier to major retail chains across North America. Experts anticipate a recovery in the company’s profitability in FY2027.
MPAA’s performance for FY2026 was broadly in line with analysts’ expectations. Adjusted EBITDA amounted to $86.1 million, while earnings per share reached $0.98, exceeding forecasts due to lower financing costs. However, part of the growth was driven by a one-time rebalancing of customer inventory, which analysts do not consider a sustainable factor.
Despite this, the Q4 showed initial signs of improving operational momentum. The company reported an expansion in gross margin, recovery in customer orders, and strengthened positioning in the brake systems segment. According to Freedom, these areas are expected to form the foundation for future business growth.
Additional support is expected from new customer contracts, increased production capacity utilization, cost-reduction initiatives, and the relocation of heavy-duty components manufacturing to Mexico. Management also anticipates over $100 million in incremental annual sales from new orders, partly attributable to competitors’ challenges.
Freedom analysts project that the company’s revenue will grow to $810 million in FY2027, with adjusted EBITDA rising to $104 million. Adjusted earnings per share, in their view, could increase from $0.98 to $1.71.
Freedom analysts believe that the combination of volume growth, margin improvement, and reduced financial burden creates favorable conditions for a significant recovery in MPAA’s financial performance in the coming years, making the stock attractive to investors.
Not an individual investment recommendation.