BorgWarner Inc. (NYSE:BWA) announced its plan to spin off its Fuel Systems and Aftermarket segments into a standalone, publicly traded company.

Analysts at Deutsche Bank provided their views on the announcement, stating they have mixed feelings about it. On the positive side, a divestiture makes strategic sense, allowing the remaining company to focus completely on growing and accelerating its EV opportunities, while the newly formed company could maximize its ICE-related free cash flow.

The remaining company’s revenue exposure to EV will become best-in-class, its growth above market profile should be higher, and if it can demonstrate margin improvement over time, this should warrant solid valuation multiple expansion for the BWA stock.

At the same time, the analysts mentioned they worry this could be dampened by the low market valuation of the stand-alone company, presumably in the context of a lack of strategic buyer interest for the assets, and since the stocks of previous ICE spinoffs have traded at low multiples.