Unlock Premium Data: Up to 50% Off InvestingProCLAIM SALE

UBS upgrades Autoliv stock, cites strong performance and margin expansion

EditorEmilio Ghigini
Published 28/05/2024, 07:04 pm
ALV
-

On Tuesday, global financial services firm UBS has upgraded Autoliv, Inc. (NYSE:ALV) stock from Neutral to Buy and increased the price target to $141 from $102.

The automotive safety systems manufacturer has shown a solid top-line outperformance relative to light vehicle production, with a 9 percentage point lead in the fiscal year 2023 and around a 6 percentage point lead in the first quarter of 2024. This performance is notably ahead of its peers.

Autoliv's margin expansion has also been highlighted as a standout, with a projected increase of 170 basis points for the fiscal year 2024 over 2023. The company's strong balance sheet has been a contributing factor to its stock price rising approximately 15% year-to-date, outperforming the sector by 20%. The firm's financial health and growth have been key factors in the upgraded rating.

UBS notes that Autoliv benefits from a degree of insulation from short-term sector concerns such as electric vehicle (EV) market penetration, intensive capital allocation needs, or underexposure to the Chinese market. These advantages position Autoliv favorably in the short, medium, and long term, according to the financial services firm.

Despite Autoliv trading at a premium compared to its peers, it is still valued below its own historical price-to-earnings multiples. The company's 12-month forward P/E ratio is currently around 11 times, in contrast to its historical average of approximately 13 times. UBS finds the stock's valuation below historical levels difficult to justify, given Autoliv's record high margins.

InvestingPro Insights

Following UBS's upgrade of Autoliv, Inc. (NYSE:ALV) to Buy status, a glance at the latest InvestingPro data reveals a company with strong financial metrics that could underpin the firm's positive outlook. Autoliv's market cap stands at a robust $10.23 billion, and its P/E ratio is currently at 19.6, which adjusts to an even more attractive 14.79 on a last twelve months basis as of Q1 2024. This suggests a reasonable valuation relative to the company's earnings.

The company's revenue growth has been impressive, with a 15.05% increase over the last twelve months leading up to Q1 2024, and a solid gross profit margin of 17.78% in the same period. Moreover, Autoliv's dividend yield is at a healthy 2.16%, with a dividend growth rate of 3.03% in the last twelve months, marking a continued commitment to returning value to shareholders. Notably, Autoliv has raised its dividend for 3 consecutive years and has maintained dividend payments for 28 consecutive years, according to InvestingPro Tips.

For investors seeking additional insights, there are more InvestingPro Tips available, including the observation that 7 analysts have revised their earnings upwards for the upcoming period, signaling potential confidence in the company's future performance. To explore these tips and more, visit InvestingPro and consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With 15 additional InvestingPro Tips listed, investors can gain a comprehensive understanding of Autoliv's investment potential.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.