Autoliv Stuck in Low Gear

Autoliv, Inc. (ALV - Analyst Report), based in Stockholm, Sweden, manufactures occupant restraint systems for automobiles and has a product portfolio consisting primarily of safety airbags, seat belts and steering wheels.

Difficult conditions in North American and West European automotive markets are of primary concern for the company. Moreover, pricing pressure from OEMs has stalled margin expansion. Hence, we rate the stock a Sell with a target price of $14.00.

Currently, Autoliv shares are trading at 19.2x our 2010 EPS estimate of $0.95. The company's revenue and earnings improvements are being offset by a weak North American and West European light-vehicles market as well as pricing pressure from OEMs. This makes us cautious and compels us to rate the stock a Sell. We set a target price of $14.00, which is 14.7x our 2010 estimate.