Superior Shares Tumble 12%
Shares of automotive parts maker Superior Industries International Inc. dropped 12% on Thursday after Prudential Securities downgraded the stock to “sell,” saying new steel wheels for cars could replace the aluminum wheels made by Superior.
In a statement released after the close of trading, Van Nuys-based Superior said its business outlook remains strong and is without any fundamental change that would account for recent weakness in the company’s stock price.
Company Chairman Louis Borick also defended his sale of 600,000 Superior Industries shares this month, a move that might have saved him nearly $5 million amid Thursday’s decline.
Prudential analyst Michael Bruynesteyn cut his rating on Superior from “hold” and said he expects a “fundamental shift” in wheel buying based on new designs for steel wheels. He said steel wheels can be produced at half the cost of aluminum wheels, potentially saving $100 a vehicle. Bruynesteyn didn’t return calls.
General Motors Corp. spokesman Jim Parks said the world’s leading auto maker is looking at using steel wheels on the base models of some of its cars and offering aluminum wheels as an option as part of an ongoing cost-savings program. Superior, a valued GM supplier, is aware of the initiative, he added.
Superior shares fell $6.06, or 12%, to $43.84 on Thursday on the New York Stock Exchange. Trading in the shares had been delayed early in the day due to of an order imbalance. Just two weeks ago the stock hit an all-time high of $53.80.
“The analyst’s report is based on anecdotal evidence with which the company doesn’t agree,” said Superior’s chief financial officer, Jeff Ornstein.
Borick said his company continues to win large new and replacement aluminum wheel contracts and sees a significant growth opportunity in its new aluminum suspension components business.
Borick also said he sold 600,000 Superior Industries shares during the last two weeks after exercising options that he had held for more than nine years and that were about to expire. Borick, who has been Superior’s president and chairman since 1957, had filed with the Securities and Exchange Commission to sell 750,000 shares.
“I filed to sell the shares on May 7th and I was only aware of Bruynesteyn’s report [Wednesday],” he told Bloomberg News.
Based on the $51.83 average closing price for the company’s stock in the two weeks ending Friday, 600,000 shares would bring about $31.1 million. The same sale after Thursday’s drop would bring about $26.3 million.
As of March 1, Borick owned 4.43 million shares, or about 17% of the firm’s outstanding shares.
