On Monday, JPMorgan adjusted its price target for Autoliv, Inc. (NYSE:ALV), a company specializing in automotive safety systems, to $119 from $117, while maintaining a Neutral rating. The adjustment reflects a nuanced view of the company's expected performance, factoring in both industry trends and specific challenges Autoliv may face.
The firm's analyst pointed out that while global light vehicle production in the third quarter is anticipated to align with expectations, the mix of customers and geographic distribution of that production is likely to create year-over-year headwinds, as seen in the first and second quarters. This trend contradicts management's previous guidance, which had suggested these challenges would lessen.
The revised estimates for Autoliv's third-quarter revenue are now set at $2,523 million, down from the previous $2,578 million estimate and below the Bloomberg consensus of $2,583 million. EBIT estimates for the same period have also been lowered to $245 million from the earlier forecast of $277 million, compared to a consensus of $254 million.
For the full year, JPMorgan predicts an organic growth rate of 1.0%, a decrease from both the earlier estimate of 2.0% and the company's guidance, which also stands at 2.0%. The full-year EBIT forecast has been reduced to $992 million from $1,030 million, which is below the consensus of $1,013 million and the implied guidance of approximately $1,032 million.
Looking ahead to 2025, the firm's EBIT forecast for Autoliv has been lowered to $1,192 million from $1,255 million, which is also below the consensus estimate of $1,221 million. The new price target takes into account the analyst's 2026 EBIT estimate of $1,335 million, which is slightly under the consensus of $1,353 million, and considers the capital structure at the end of 2025.
In other recent news, Autoliv Inc. has been the subject of multiple analyst assessments following its Q2 2024 performance. The company reported lower-than-expected earnings for the June quarter, with revenue at $2.61 billion and earnings per share (EPS) at $1.87. As a result, Autoliv revised its full-year 2024 revenue growth forecast down to 1% from the previously expected 5%. Despite these adjustments, the company anticipates a stronger second half with margins between 11-12% and plans to reduce its indirect workforce by up to 2,000, aiming to save $50 million in 2024.
Goldman Sachs maintained a Buy rating on Autoliv, citing potential for further challenges but also highlighting several factors that could support the company's margin in the second half of the year. Deutsche Bank also initiated coverage on Autoliv with a Buy rating, expressing confidence in the company's ability to grow earnings in the medium to long term. Meanwhile, Mizuho Securities, Baird, and BofA Securities adjusted their price targets for Autoliv, influenced by the company's Q2 earnings and revenues.
InvestingPro Insights
To complement JPMorgan's analysis of Autoliv, Inc. (NYSE:ALV), recent data from InvestingPro offers additional context for investors. As of the last twelve months ending Q2 2024, Autoliv reported revenue of $10.57 billion, with a growth rate of 8.25%. This aligns with JPMorgan's focus on the company's revenue performance and growth expectations.
InvestingPro Tips highlight that Autoliv is currently trading at a low P/E ratio relative to its near-term earnings growth, with an adjusted P/E ratio of 10.78. This could be of interest to value investors, especially considering JPMorgan's revised estimates. Additionally, the company has maintained dividend payments for 28 consecutive years, demonstrating a commitment to shareholder returns despite the challenges noted in the analysis.
It's worth noting that Autoliv's stock is trading near its 52-week low, which may reflect the market's response to the headwinds mentioned in JPMorgan's report. Investors seeking more comprehensive insights can access 11 additional tips on InvestingPro, providing a broader perspective on Autoliv's financial health and market position.
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