(RTTNews) - Thursday, KeyBanc Capital upgraded TRW Automotive Holdings Corp. (TRW: News ) shares to Buy from Hold with a price target of $29. The brokerage raised its 2009 per share estimate to profit $0.45 from loss $0.90, and its 2010 EPS estimate to $1.76 from $0.58.

Analyst Brett Hoselton upgraded the stock following TRW's third quarter earnings release. The analyst raised estimates due primarily to better than expected sales and margins. The analyst said that global light vehicle production returns to normalized levels, TRW's operating margins are likely to be higher than their historical range.

The analyst believes that financial risk has largely abated given covenant relief from TRW's banking group, a completed $269 million equity offering, and the stabilization/improvement in auto sales and production in second half of 2009 from first half. Going forward, the analyst believes TRW will likely generate solid free cash flow, which he believes would be used to reduce debt, interest expense and improve balance sheet.
The analyst said that there is good possibility the company's U.S. operations could become profitable once production returns to normalized levels and, because of TRW's substantial deferred tax assets, the company would not be a tax payer in the United States for many years, which would likely drive free cash flow higher than historic levels.

Currently, TRW is up $1.11 or 6.11% and trading at $19.36.

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by RTT Staff Writer

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