American Axle stock price target maintained at $6 by Stifel

Investing.com - Stifel has reiterated its Hold rating on American Axle (NYSE:AXL) with a price target of $6.00, according to a research note released Tuesday. The stock, currently trading at $6.22, has shown strong momentum with a 38% gain over the past six months, though InvestingPro data indicates the stock is currently in overbought territory.

American Axle announced plans to offer $843 million of senior secured notes due 2032 and $600 million of senior unsecured notes due 2033. The proceeds will partially finance the cash portion of its pending acquisition of Dowlais Group plc, including repaying Dowlais’ existing credit facilities. The company maintains a healthy current ratio of 1.77x, indicating sufficient liquidity to meet its short-term obligations.

Management indicated it may choose to upsize the offering by $600-$1,100 million to pay off its current 6.5% senior notes due in 2027. This move would effectively refinance American Axle’s existing debt.

The potential refinancing would extend current maturities out 6 years, which Stifel views as a positive development for the company.

Stifel analyst Nathan Jones maintained his Hold rating on American Axle stock while keeping the price target unchanged at $6.00.

In other recent news, American Axle & Manufacturing Holdings Inc. has announced plans to raise $1.4 billion in notes to fund its acquisition of Dowlais Group plc. This financing will include $843 million in senior secured notes due 2032 and $600 million in senior unsecured notes due 2033. S&P Global Ratings has revised its outlook on American Axle to negative from stable, citing integration risks and near-term cash flow concerns following the acquisition. The transaction is expected to increase the company’s adjusted leverage to approximately 4.5x for fiscal 2025, with anticipated cost synergies of $300 million by the end of the third year.

RBC Capital has upgraded American Axle’s stock rating from Sector Perform to Outperform, raising its price target to $8.00. This upgrade is based on the synergies expected from the pending Dowlais transaction. Meanwhile, Stifel initiated coverage on American Axle with a Hold rating and a $6.00 price target. In related developments, RBC Capital downgraded Dowlais Group PLC from Outperform to Sector Perform, noting the share price’s proximity to the implied American Axle bid price. These developments highlight the financial and strategic maneuvers surrounding American Axle’s significant business combination with Dowlais.

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