UBS has upgraded its stance on American Axle & Manufacturing (AXL, Financial), moving the company from a Neutral rating to Buy. Alongside this upgrade, UBS has increased the stock's price target to $7, up from the previous $4.50. The brokerage firm highlights American Axle's strong prospects due to its involvement in key programs like General Motors’ (GM) full-size truck and SUV platform. This positive outlook comes in light of a more relaxed emissions regulatory environment in the United States.
Additionally, UBS notes that GM's expansion of U.S. production capacity is advantageous for American Axle, potentially enhancing future earnings, an aspect that is not yet widely reflected in market expectations. The firm suggests that a proposed deal with Dowlais could generate lasting value for American Axle at its current share price. Investors are encouraged to consider these factors as they might present lucrative opportunities in the long term.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 7 analysts, the average target price for American Axle & Mfg Holdings Inc (AXL, Financial) is $5.20 with a high estimate of $7.50 and a low estimate of $4.00. The average target implies an upside of 17.91% from the current price of $4.41. More detailed estimate data can be found on the American Axle & Mfg Holdings Inc (AXL) Forecast page.
Based on the consensus recommendation from 8 brokerage firms, American Axle & Mfg Holdings Inc's (AXL, Financial) average brokerage recommendation is currently 3.0, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for American Axle & Mfg Holdings Inc (AXL, Financial) in one year is $7.03, suggesting a upside of 59.41% from the current price of $4.41. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the American Axle & Mfg Holdings Inc (AXL) Summary page.
AXL Key Business Developments
Release Date: May 02, 2025
- Revenue: $1.41 billion for Q1 2025, down from $1.61 billion in Q1 2024.
- Adjusted Earnings Per Share (EPS): $0.09 per share for Q1 2025.
- Operating Cash Flow: $55.9 million for Q1 2025.
- Adjusted Free Cash Flow: Use of $3.9 million for Q1 2025.
- Adjusted EBITDA: $177 million, or 12.6% of sales for Q1 2025.
- Gross Profit: $173.9 million for Q1 2025, compared to $198.5 million in Q1 2024.
- SG&A Expense: $90.9 million or 6.4% of sales for Q1 2025.
- Net Income: $7.1 million or $0.06 per share for Q1 2025.
- Net Debt: $2.1 billion as of March 31, 2025.
- Total Available Liquidity: Approximately $1.5 billion.
- 2025 Sales Guidance: $5.65 billion to $5.95 billion.
- 2025 Adjusted EBITDA Guidance: $665 million to $745 million.
- 2025 Adjusted Free Cash Flow Guidance: $165 million to $215 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- American Axle & Mfg Holdings Inc (AXL, Financial) reported first-quarter 2025 sales of $1.41 billion, demonstrating strong operational performance.
- The company achieved an adjusted EBITDA of $177 million, or 12.6% of sales, with a sequential improvement of approximately 100 basis points.
- Exiting joint ventures in China resulted in a cash collection of approximately $30 million, aligning with the company's focus on core businesses.
- The strategic combination with Dowlais is expected to yield approximately $300 million in synergies and enhance cash flow for deleveraging.
- The company maintains a strong liquidity position with approximately $1.5 billion in available liquidity, including cash and credit facilities.
Negative Points
- First-quarter 2025 sales decreased from $1.61 billion in the first quarter of 2024, primarily due to lower volumes in North America.
- Adjusted free cash flow was a use of $3.9 million, indicating challenges in cash generation despite operational improvements.
- The adjusted effective tax rate is expected to be approximately 50% due to valuation allowances and interest deduction limitations.
- The company faces macro uncertainty driven by new trade policies and tariff impacts, which could affect future operations.
- North American production was down approximately 5% year over year, impacting overall sales and profitability.
