Deutsche Bank raised its rating on BorgWarner (NYSE:BWA) to Buy from Hold and increased the firm's price target to $82.00 from $46.00, citing the automaker-supplier’s recent strategic shift into power solutions for AI data centers.
In research commentary, Deutsche Bank analyst Edison Yu framed the move as "a pivotal shift from being a traditional Tier-1 powertrain supplier to a more diversified multi-industrial entity." The upgrade follows BorgWarner’s announced collaboration with TurboCell to supply a modular turbine generator system targeted at the AI data center market.
Deutsche Bank projects that the TurboCell-related business alone could generate more than $300 million in revenue in 2027. The bank characterized that initial contract as likely the opening phase of a broader opportunity, saying it could provide "a secular growth tailwind for multiple years."
On profitability, Deutsche Bank expects the new revenue stream to begin with mid-teens margins, "suggesting large scale isn’t even necessary for profitability," and built its $82 price target using an 8.5x multiple on 2026 estimated EBITDA.
Separately, BorgWarner reported fourth-quarter 2025 results that outperformed forecasts. The company posted revenue of $3.57 billion and reported earnings per share of $1.35, topping consensus EPS estimates of $1.18. Revenue surpassed expectations of $3.51 billion.
Deutsche Bank noted that the company’s EBIT exceeded both the bank’s internal projections and consensus estimates. Management also reported operating margin improvement in the quarter, boosted by approximately 100 basis points as a result of recoveries.
Analysts cited the stronger-than-expected quarterly performance as reinforcing investor sentiment around the company’s near-term financial trajectory, while the TurboCell agreement framed a possible multi-year growth vector tied to data center demand.
While the upgrade centers on the new data center opportunity and recent earnings momentum, Deutsche Bank’s revised valuation rests on assumptions about 2026 EBITDA and the early profitability of the modular turbine business. The bank’s view treats the TurboCell arrangement as an initial step that could expand into a larger, sustained revenue stream over time.
Readers should note that the commentary and valuation described above reflect Deutsche Bank’s analysis and the reported fourth-quarter results; the company’s future performance will depend on execution of the new business lines and the durability of the margin improvements reported in Q4 2025.