Autoliv's Cost Reduction Plan To Garner $25M In Savings In FY24 Amid Stronger Pricing, Analyst Says

Mizuho analyst Jason Getz reiterated a Buy rating on Autoliv, Inc. ALV, raising the price target to $106 from $96.

ALV recently reported second-quarter FY23 sales growth of 27% year-on-year to $2.63 billion, beating the analyst consensus of $2.54 billion. Adjusted operating margin for the quarter was 8% versus 6% last year. Adjusted operating income increased 71% to $212 million.

The analyst notes that the company gained from stronger pricing and new product launches in the quarter.

While ALV saw a $27 million headwind from FX, a combination of price increases and cost savings drove a $212 million operating profit, the analyst adds. 

For the year, ALV now sees an overall ~1% FX tailwind.

Getz thinks ALV will see costs remaining elevated for labor. However, the company will see better operating margins on pricing compensation and recoveries, headcount reduction, and seasonality.

For 2024, ALV noted cost reduction plans expected $25 million in savings in 2024, rising to $55 million in 2025 and $75 million by completion.

For FY23, the analyst raised Rev/EPS forecast from $10.1 billion/$6.53 to $10.2 billion/$6.94 (cons. $10.1 billion/$6.50).

For FY24, the analyst raised Rev/EPS forecast from $11.0 billion/$9.55 to $11.1 billion/$9.72 (cons. $10.9 billion/$9.33).

For FY25, The analyst raised Rev/EPS forecast from $11.8 billion/$10.72 to $11.9 billion/$11.00 (cons. $11.6 billion/$10.94). 

Price Action: ALV shares are trading lower by 0.89% to $101.87 on the last check Monday.