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On Tuesday, Barclays (LON:BARC) upgraded Autoliv, Inc. (NYSE:ALV) stock from Equalweight to Overweight, despite reducing the price target to $97 from $110. The stock, currently trading at $82.76, has shown resilience with a 7.8% gain over the past week. Barclays analysts pointed out the strength of Autoliv’s passive safety portfolio, which includes airbags and seatbelts, noting these are critical safety components that original equipment manufacturers (OEMs) are unlikely to reduce. According to InvestingPro data, the company trades at an attractive P/E ratio of 10.3x, suggesting potential value for investors. They acknowledged that uptake of some of Autoliv’s premium content might slow down due to the current economic climate, but emphasized the company’s historical ability to maintain strong pricing power.
The analysts highlighted Autoliv’s significant market presence, with a 44% global market share in 2024, particularly in Western markets. This concentration has allowed Autoliv to pass on costs, such as labor, to their customers more effectively than competitors, who have had to absorb a greater percentage of these costs. InvestingPro analysis reveals the company’s strong dividend track record, maintaining payments for 29 consecutive years with a current yield of 3.38%. The firm underlined that this pricing power is particularly advantageous in the current environment, enabling Autoliv to potentially pass on any tariff costs to their OEM customers.
Despite potential volume risks in the market, Barclays sees positive aspects in Autoliv’s geographic distribution. They noted that Autoliv’s Asia excluding China exposure, which accounts for approximately 20% of its revenue, could provide some balance against lower export volumes. Within this exposure, Autoliv’s presence in India, which represents about 5% of its revenue, was mentioned as a small but potentially offsetting factor.
Barclays’ upgrade reflects their view that Autoliv’s strong market position and pricing strategy will support the company through challenging economic conditions. The reduction in the price target from $110 to $97 takes into account the potential headwinds faced by the company, while still recognizing its underlying strengths. InvestingPro analysis indicates that Autoliv is currently undervalued, with additional ProTips and detailed financial metrics available in the comprehensive Pro Research Report, part of the extensive coverage of over 1,400 US stocks.
In other recent news, Autoliv Inc. reported its fourth-quarter 2024 earnings, where it exceeded earnings per share (EPS) expectations but missed on revenue. The company posted an EPS of $3.05, surpassing the forecast of $2.88, while revenue fell short, coming in at $2.62 billion against the anticipated $2.7 billion. In analyst updates, TD Cowen initiated coverage on Autoliv with a Buy rating and set a price target of $93, citing the company’s strong market position and potential for margin expansion by 2025. The firm also noted that easing pressures from Autoliv’s China mix could positively impact its business. Autoliv’s strategic focus on operational efficiencies and cost management contributed to the earnings beat, despite revenue challenges that might be linked to market headwinds. Looking forward, Autoliv has set ambitious EPS forecasts for the upcoming quarters, with expectations of $2.1 for Q2 2025 and $9.08 for the full year 2025. CEO Mikael Bratt emphasized the company’s commitment to operational excellence and innovation to navigate current market conditions.
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