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Lear's (LEA) InTouch Buyout to Aid its Industry 4.0 Strategy

Lear Corporation LEA recently announced that it has acquired InTouch Automation, a supplier of Industry 4.0 technologies and automated testing equipment that are vital for producing automotive seats.

InTouch's product portfolio aligns with Lear’s Industry 4.0 strategy that deals with implementing technologies designed to automate the testing and validation of components and finished seats. Industry 4.0 strategy includes integrating the Internet of Things (IoT), cloud computing and analytics, and artificial intelligence and machine learning into production facilities and throughout manufacturing operations. The high-tech solutions enhance Lear’s ability to collect and analyze real-time data while standardizing testing procedures throughout its just-in-time (JIT) seating production process.

The acquisition marks a notable step in bolstering Lear’s automation and manufacturing flexibility.

InTouch, founded in 2006, is privately owned and based in Novi, MI. Its important products include End of Line (EOL) testing equipment for complete seats, in-process testing equipment for JIT seating, automation of EOL testing, industrial multi-use seat connectors and autodocking.

Lear is riding high on acquisitions. The buyout of M&N Plastics, concluded in March 2021, has increased the vertical integration in the E-Systems unit. The buyout of Kongsberg has strengthened Lear’s Seating business. The deal has expanded its seat component capabilities and added innovative technologies to further differentiate Lear’s product offerings, thereby enhancing both top-and bottom-line growth. The acquisition of Xevo has enhanced Lear’s capabilities in software, services and data analytics, bolstering its market position in connectivity.

Lear’s Connection Systems business is on track to grow to around $500 million in 2022 and approximately $900 million to $1 billion by 2025. The IMS connector systems partnership, entered in June 2021, increases Lear’s access to specialized High-Speed Data connectors, which bodes well.  By integrating its existing seating capabilities with thermal comfort systems, the firm has extended its competitive advantage and leadership position in the Seating segment. Its ConfigurE+ product offering brings unparalleled safety, ease of use and functionality to vehicle seating. Lear’s thermal comfort system expertise makes it poised to capture market trends in EVs and ride-sharing, paving the way for long-term gains.

Shares of LEA have lost 18.4% in a year compared with the industry’s 38% decline.

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Zacks Investment Research

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Zacks Rank & Key Picks

LEA currently has a Zacks Rank #3 (Hold).

Here are some better-ranked players in the auto space – PRTS, sporting a Zacks Rank #1 (Strong Buy), and Allison Transmission Holdings ALSN and Genuine Parts Company GPC, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

CarParts has an expected earnings growth rate of 85% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised 72.7% upward over the past 30 days.

Allison has an expected earnings growth rate of 26.1% for the current year. The Zacks Consensus Estimate for ALSN’s current-year earnings has been revised 3.8% upward in the past 30 days.

Genuine Parts has an expected earnings growth rate of 18.1% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised 2.6% upward over the past 30 days.

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