FTSE 100: Index falls as earnings results weigh; pound below $1.33, Bodycote soars
On Monday, TD Cowen analyst Itay Michaeli adjusted the price target on Autoliv, Inc. (NYSE:ALV) to $106.00 from the previous $116.00, while reiterating a Buy rating for the company’s shares. According to InvestingPro data, the company appears undervalued at current levels, with analyst price targets ranging from $82 to $140. The revision follows Autoliv’s first-quarter results, which Michaeli found reassuring and supportive of the firm’s positive outlook on the stock. The updated financial model now reflects the company’s guidance, albeit with reduced auto production forecasts due to tariff and macroeconomic risks.
Michaeli’s assessment acknowledges that while their North American production forecast for 2025 is more optimistic than S&P’s projections, it still anticipates a decrease year-over-year. The TD Cowen analyst expects a higher US SAAR (Seasonally Adjusted Annual Rate) and year-end inventory levels than S&P’s forecast, which predicts a 9% decline. In contrast, Michaeli’s model anticipates a 6% decrease.
The revised estimates for Autoliv’s future financial performance include a 2025 revenue projection of $10.1 billion, slightly below the company’s guidance of approximately $10.3 billion. For context, InvestingPro shows current trailing twelve-month revenue of $10.35 billion, with a gross profit margin of 18.95%. The 2025 EBIT estimate is now set at $986 million, which corresponds to a 9.8% EBIT margin, a decrease from the previously expected 10.3%. InvestingPro Tips indicate the company is trading at an attractive P/E ratio of 9.76x relative to its near-term earnings growth potential. These adjustments reflect a 3-5% reduction in out-year revenue and a 9-13% decrease in EBIT.
Michaeli’s price target adjustment is based on these lowered estimates while keeping the 2025 target multiples unchanged. Despite the reductions, TD Cowen maintains a favorable view on the risk/reward balance for Autoliv’s stock. The analyst’s commentary underscores a cautious yet positive outlook, factoring in the current economic landscape and its impact on the automotive industry’s production levels. InvestingPro analysis reveals 5 analysts have recently revised their earnings expectations downward, with 6 additional key insights available to subscribers through the comprehensive Pro Research Report.
In other recent news, Autoliv Inc. reported first-quarter earnings and revenue that surpassed analyst expectations. The company posted adjusted earnings per share of $2.15, significantly exceeding the consensus estimate of $1.67. Revenue was reported at $2.58 billion, topping the anticipated $2.5 billion and showing a 2.2% organic growth year-over-year. Despite a 0.4% decline in global light vehicle production, Autoliv managed to expand its adjusted operating margin to 9.9% from 7.6% the previous year. This improvement was attributed to successful cost reduction efforts, including a 6% reduction in total headcount, and organic sales growth. The company reiterated its guidance for 2025, expecting around 2% organic sales growth and an adjusted operating margin of approximately 10-10.5%. Autoliv also anticipates operating cash flow of about $1.2 billion for the year. The company highlighted a record number of new launches, which it expects will enhance its sales performance in China in 2025.
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