Morgan Stanley Maintains on American Axel & Manufacturing

In a report published Thursday, Morgan Stanley analyst Adam Jonas maintained Underweight on

. According to the report, while the analysts had anticipated many of the headwinds impacting 2013 and 2014, consensus still has room to fall. AXL maintained its 2015 guidance but will have to navigate a tricky 2014 first. “AXL guided to $3.75-$3.8bn of sales (vs. MSe and cons $3.8bn) with EBITDA margins in the 13.5%-14.0% (vs. MSe 13.6% and cons 14.0%) and FCF of ~$100mm (vs. MSe $120mm),” the report noted. “Capex is expected to be ~6% (vs. MSe 6.1%). Guidance based on K2XX build assumption of 1.15 mm units. The soft margin guide was attributed to downtime for the K2XX SUVs/HD trucks, investment in IT systems ($10 mm) and R&D ($8-10 mm), half of which is expected to continue into 2015. Mgmt. saw the opportunity to become more efficient with K2XX production vs. 2013 but this would be offset by pricing givebacks.” AXL closed Wednesday at $20.97.