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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.

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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.

View more earnings on ALV

"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."

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Latest Ratings for ALV

Jul 2017

Bank of America

Maintains

Neutral

Jul 2017

Mizuho

Upgrades

Neutral

Buy

Jun 2017

Guggenheim

Initiates Coverage On

Neutral

View More Analyst Ratings for ALV
View the Latest Analyst Ratings

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