Last Update 29 Apr 26

GTX: HVAC Compressor Contracts And Buybacks Will Support Balanced Future Electrification Potential

Analysts kept their average price target for Garrett Motion steady at about $22.17. The latest bullish research cited a balanced view on modestly adjusted revenue growth and profit margin assumptions as key support for this valuation.

Analyst Commentary

Recent research initiating coverage on Garrett Motion highlights a generally constructive stance around the current average price target of about US$22.17, with analysts framing their views around revenue assumptions, profitability, and the company’s ability to execute on its plan.

Bullish Takeaways

Bullish analysts view the steady average target of about US$22.17 as consistent with their expectations for balanced revenue assumptions and profit margins, rather than relying on aggressive growth scenarios.
They see the modest adjustments to revenue and margin inputs as a sign that the valuation is grounded in what they regard as achievable execution, not stretch case forecasts.
Supporters of the bullish case point to the alignment between current pricing and these updated assumptions. In their view, the risk and reward profile is reasonably matched.
Some bullish analysts consider the reaffirmed target a reflection of increasing confidence in the company’s ability to maintain the level of profitability embedded in current models.

Bearish Takeaways

Bearish analysts question whether the modestly adjusted revenue and margin assumptions fully capture potential execution risks, especially if underlying conditions turn less supportive than currently reflected in forecasts.
They highlight that keeping the average target around US$22.17 leaves limited cushion if revenue or profit margins come in below the modeled levels.
More cautious views also focus on the possibility that the current valuation already reflects the optimistic end of the provided assumptions. This could restrict upside if the company only meets, rather than exceeds, those expectations.
Some bearish analysts flag the reliance on balanced assumptions as a concern, arguing that without a wider range of scenarios, the valuation may not fully incorporate downside outcomes.

What's in the News

Garrett Motion announced a collaboration with TONFY to integrate its oil free centrifugal compressor technology into TONFY’s 80 kW liquid cooling units for battery energy storage systems and other high density infrastructure, with plans for mass production in 2027 and exploration of additional cooling applications in China and overseas markets (Key Developments).
The company is showcasing a portfolio of oil free centrifugal compressors for data centers, battery energy storage systems, and wider industrial and commercial cooling at China Refrigeration Expo 2026. The portfolio covers cooling demands from 7 to 500 tons and includes a new 1,250 kWc compressor aimed at high performance data center and industrial systems (Key Developments).
Garrett Motion received its first serial award for an oil free, foil bearing based centrifugal compressor in the mobility sector from Cling for next generation electric bus and truck HVAC systems in China. Production is expected to start in 2027 and targets smaller, lighter and quieter operation compared with traditional scroll compressors (Key Developments).
The company issued full year 2026 earnings guidance, indicating expected GAAP net sales of US$3.6b to US$3.8b and GAAP net income of US$295m to US$335m (Key Developments).
Garrett Motion reported that, under the buyback announced on December 5, 2024, it has completed the repurchase of 16,890,791 shares, representing 8.4% of shares, for US$207.85m as of the period ending December 31, 2025 (Key Developments).

Valuation Changes

Fair Value: The model fair value remains unchanged at about $22.17 per share, indicating no adjustment to the central valuation estimate.
Discount Rate: The discount rate has fallen slightly from about 8.84% to about 8.81%, reflecting a small tweak to the required return used in the model.
Revenue Growth: Revenue growth assumptions have been reduced modestly from about 3.76% to about 3.47%, implying slightly lower top line expectations in the latest update.
Net Profit Margin: Net profit margin assumptions have risen slightly from about 9.90% to about 10.00%, pointing to a small increase in expected profitability levels.
Future P/E: The future P/E multiple is effectively unchanged, shifting marginally from about 11.24x to about 11.23x in the revised model.

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Key Takeaways

Expansion into hybrid, electric, and industrial sectors enhances revenue stability and positions the company for diversified, higher-margin growth amid electrification uncertainty.
Strong operational efficiency and gains in key global markets offset segment softness, supporting resilient earnings and healthy cash flow in a shifting automotive landscape.
Heavy reliance on declining ICE markets, slow growth in electrification, margin pressures, and exposure to global risks threaten earnings stability and long-term profitability.

Catalysts

About Garrett Motion

Designs, manufactures, and sells turbocharging, air and fluid compression, and high-speed electric motor technologies for original equipment manufacturers and distributors in the United States, Europe, Asia, and internationally.What are the underlying business or industry changes driving this perspective?

The company secured over $1 billion of long-term light vehicle turbo program extensions and new business wins for hybrid/extended range electric vehicles, significantly increasing forward visibility on future revenues despite industry-wide electrification uncertainty.
Momentum in newly launched large turbo products for genset and marine applications-particularly serving the rapidly expanding data center backup power market-provides access to a new, fast-growing revenue stream that can contribute hundreds of millions in annual sales over the next several years.
Ongoing innovation and proof-of-concept awards in zero-emission technologies (E-Powertrain, E-Cooling, and fuel cell compressors) and expansion in industrial/non-automotive end markets are positioning Garrett to capture higher-margin business opportunities and diversified growth, supporting both revenue and future margin expansion.
Continued operational efficiency improvements and cost control programs are helping maintain robust free cash flow and healthy EBIT margins (with second quarter free cash flow conversion at 98%), increasing underlying earnings power even in a challenging volume and product mix environment.
Strength in gasoline turbo sales, gain in global market share, and new launches in key regions (Europe, Asia) are offsetting softness in diesel and aftermarket segments, indicating the transitionary period before full electrification can be an earnings and revenue tailwind for at least the medium term.

Garrett Motion Earnings and Revenue Growth

Garrett Motion Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Garrett Motion's revenue will grow by 3.5% annually over the next 3 years.
Analysts assume that profit margins will increase from 8.6% today to 10.0% in 3 years time.
Analysts expect earnings to reach $396.5 million (and earnings per share of $2.37) by about April 2029, up from $310.0 million today.
In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 11.3x on those 2029 earnings, down from 12.3x today. This future PE is lower than the current PE for the US Auto Components industry at 19.2x.
Analysts expect the number of shares outstanding to decline by 6.24% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.81%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

Garrett Motion's core business continues to rely heavily on gasoline and diesel turbocharger sales, products whose long-term demand is threatened by accelerating global adoption of electric vehicles (EVs); this secular shift could drive structural long-term revenue decline as the addressable market for ICE components erodes.
Despite growth in zero-emission product lines (e.g., E-Powertrain, E-Cooling, fuel cell compressors), these segments remain relatively nascent compared to ICE-related revenue, posing a risk that the company's overall transition to electrified and non-ICE technologies may not offset declines quickly enough to preserve long-term earnings and margin stability.
The company is experiencing margin pressure due to an unfavorable sales mix (higher proportion of lower-margin gasoline turbo sales and continued weakness in high-margin aftermarket and diesel segments), which, if persistent, could limit expansion in net margins and depress profitability over time.
Increased tariff-related costs, even with partial recovery, and ongoing currency fluctuations highlight continued exposure to global economic and geopolitical volatility, which may compress margins and challenge operating earnings if macro headwinds persist or intensify.
While the company highlights sizable multi-year program extensions and new wins, its financial performance remains vulnerable to industry volume swings, inventory overhang in customer channels, and high customer concentration among global automakers-factors that could negatively affect revenue predictability and overall earnings resilience.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $22.17 for Garrett Motion based on their expectations of its future earnings growth, profit margins and other risk factors.
However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $24.0, and the most bearish reporting a price target of just $19.0.
In order for you to agree with the analysts, you'd need to believe that by 2029, revenues will be $4.0 billion, earnings will come to $396.5 million, and it would be trading on a PE ratio of 11.3x, assuming you use a discount rate of 8.8%.
Given the current share price of $20.29, the analyst price target of $22.17 is 8.5% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

GTX: Market Leadership And Electrification Expansion Will Guide Balanced Outlook