AXL stock touches 52-week low at $4.78 amid market challenges

American Axle (NYSE:AXL) & Manufacturing Holdings Inc. (AXL) stock has hit a 52-week low, trading at $4.78, as the automotive parts supplier grapples with a challenging market environment. Over the past year, AXL has seen a significant decline, with the stock price plummeting by nearly 38.97% from its previous positions. Despite this decline, analysts maintain price targets ranging from $6 to $10, suggesting potential upside. This downturn reflects broader industry trends and investor concerns about the company’s future performance amidst economic headwinds, though the company’s EBITDA stands at $741 million for the last twelve months. The 52-week low serves as a critical indicator for investors monitoring the company’s trajectory and assessing the potential for a rebound or further declines in the coming months. InvestingPro analysis indicates the stock is currently undervalued, with 8 additional exclusive insights available to subscribers through their comprehensive Pro Research Report.

In other recent news, American Axle & Manufacturing, Inc. has secured the acquisition of UK-based Dowlais Group plc, a move that will nearly double the scale of the company. The $3 billion cash and equity deal is expected to complete by the end of 2025, and the acquisition funding proposal includes almost $2.2 billion in additional debt. Moody’s (NYSE:MCO) Ratings states that this development will not affect American Axle’s B1 corporate family rating, though it may impact ratings of individual debt instruments due to the proposed financing structure.

The acquisition is projected to bring American Axle’s revenue to over $11 billion, improving both customer and geographic diversification, and aiding the company’s transition to alternative propulsion capabilities. Dowlais is expected to contribute positively to margins, especially given American Axle’s projected run-rate synergies of at least $300 million over the first three years.

However, the addition of a large amount of senior debt could bring the current Ba1 rating on the company’s senior secured debt closer to the B1 CFR. This is due to it comprising a majority of the debt capital structure and reducing recovery expectations in the event of default. Despite this, American Axle’s strong competitive position in driveline and metal forming products continues to grow, and with the addition of Dowlais, customer and geographic diversification are expected to significantly improve.

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