UBS has downgraded BorgWarner to Sell from Neutral, citing that the stock already reflects optimistic expectations for its new TurboCell data center power generation business. The firm raised its price target to $55 from $49 but warned that about 50% of the upside is already baked into the current share price.

BorgWarner's core business faces challenges, with the Foundational and eProducts segment expected to decline 1% in 2026 and battery revenue projected to fall $210 million. While the company's TurboCell product could generate $300 million in 2027 sales and potentially reach $1.5 billion by 2030, UBS expects a more modest ramp-up, reaching roughly half that level even in the most optimistic scenario.

UBS flagged several execution risks, noting that TurboCell is a startup venture and BorgWarner lacks experience producing turbines at scale. The bank also highlighted that BorgWarner has provided limited details on pricing and specifications, suggesting the project remains in early stages. Despite positives like availability and shorter lead times versus traditional turbines, UBS believes the risk-adjusted return is unattractive given these uncertainties.