American Axle Posts Lower 2020 Sales Amid Shutdowns; Shares Drop 7%


Shares of American Axle & Manufacturing Holdings plunged 7% on Feb. 12 after the supplier of automotive parts reported lower 2020 sales.

Meanwhile, American Axle (AXL) posted earnings per share (EPS) of $0.51 during the fourth quarter, which came in ahead of the $0.28 expected by analysts. Revenue increased 0.7% year-on-year to $1.44 billion topping analysts’ estimates of $1.36 billion.

Global production shutdowns amid the COVID-19 pandemic adversely affected American Axle’s full-year results. For fiscal 2020, the company generated sales of $4.71 billion, down from the $6.53 billion posted in 2019. Its net loss of $561.3 million also included impairment charges of $510 million. Diluted loss per share came in at $4.96 versus $4.31 in the comparable year-ago period.

American Axle’s CEO Dvid Dauch said, “We benefitted from recovery in production in second half of 2020.”

Following a tough 2020, the company said it looks forward to a better 2021, which will include the launch of different electrification programs and investment plans in next generation propulsion technologies.

Looking ahead, for fiscal 2021, American Axle sees revenues land between $5.3 billion to $5.5 billion and adjusted EBITDA to be in the range of $850 million to $925 million. This outlook reflects industry assumptions of light vehicle production of 15.5 to 16 million units in North America, of about 19 million units in Europe and of about 25 million unit in China.  (See American Axle stock analysis on TipRanks)

Deutsche Bank Analyst Emmanuel Rosner last month raised American Axle’s price target to $9 (8.4% downside potential) from $8 but reiterated a Hold rating. Rosner sees “strong” volume growth for US vehicles in 2021 and a “solid” mix and pricing helped by lower inventory levels and demand induced by the pandemic.

The analyst also expects upside in demand from higher federal spending on infrastructure and vehicle electrification.

The rest of the Street has a Hold consensus rating on the stock. That’s based on 1 Buy,  3 Holds and 1 Sell. The average analyst price target of $9.30 implies 5.30% downside from current levels.

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