Bobby Harvey
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Friday's Sell Off In Autoliv Shares Created An Opportunistic Entry Point For Long-Term Bulls

Shares of Autoliv Inc.  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 1 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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