Pricing pressures and high customer concentration are impacting Wonder Auto Technology’s (WATG) operations. These problems are aggravated by the presence of tough competitors in the domestic market, who have longer operating histories than Wonder Auto.
Pricing pressure in the automotive supply industry has been substantial and is likely to continue. This has adversely affected Wonder Auto’s sales and profit margins, and is expected to do so in the future.
Furthermore, the company relies heavily on products that generate lower margins. These factors have led us to downgrade the long-term recommendation for Wonder Auto Technology from Neutral to Underperform with a target of $7.25.Zacks Investment Research
