Market Overview

Friday's Sell Off In Autoliv Shares Created An Opportunistic Entry Point For Long-Term Bulls

Share:
Friday's Sell Off In Autoliv Shares Created An Opportunistic Entry Point For Long-Term Bulls

Shares of Autoliv Inc. (NYSE: ALV) were hard hit on Friday after the company disappointed investors in its earnings report. But the sell off has also created an "opportunistic entry point" for a long-term investment, at least according to analysts at BMO Capital Markets.

BMO's Richard Carlson maintains an Outperform rating on Autoliv's stock with an unchanged $121 price target as the company's longer-term outlook remains "strong." In fact, even an in-line earnings report wouldn't have been enough to support the stock and that most of the revenue miss was due to "below-the-line items."

The company's gross margin of 21 percent was a second-quarter record and adjusted EBIT margin slightly missed at 8.4 percent versus expectations for 8.5 percent, the analyst continued. Also, despite a $110 million payment to Zenuity in the quarter and a $157 million share buyback, the company's balance sheet "remains in great shape" and under-levered with a net-debt leverage of just 0.7x.

Finally, the company did cut its full-year organic growth outlook from around 4 percent to around 2 percent, but encouragingly, full-year total sales expectations remain unchanged at up 3 percent. In addition, management continues to expect its full-year adjusted operating profit margin of around 8.5 percent.

"With the stock falling back below $110 with the overall outlook remaining strong, we believe the shares are opportunistically priced for re-entry," the analyst concluded.

Bottom line, the analyst remains "bullish on anything "safety related" and Autoliv is "the only pure play in the space."

Related Links:

Nvidia-Volkswagen Relationship Deepens As Deluge Of Autonomous Car News Continues

JPMorgan's Aviation, Transportation, Industrials Conference Concludes Wednesday; Expect Volatility In Airline Stocks

Latest Ratings for ALV

DateFirmActionFromTo
Nov 2019UpgradesUnderperformPeer Perform
Nov 2019UpgradesNeutralBuy
Oct 2019MaintainsNeutral

View More Analyst Ratings for ALV
View the Latest Analyst Ratings

Posted-In: Analyst Color Earnings Long Ideas News Guidance Reiteration Travel Analyst Ratings Best of Benzinga

 

Related Articles (ALV)

View Comments and Join the Discussion!

Analyst Says 31 Million Homes Could Cut Cord On Legacy Media; New Study Shows 64% Of U.S. Households Now Stream Programs

Ahead Of Earnings: Why You Should Be Buying Merck And Selling Bristol-Myers