American Axle (AXL) has received a new Buy rating, initiated by BWS Financial analyst, Hamed Khorsand.
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Hamed Khorsand has given his Buy rating due to a combination of factors that, in his view, the market is not fully recognizing in American Axle’s current valuation. He highlights that the pending merger with Dowlais Group will materially transform the company by broadening its customer base across additional automakers and regions, while also expanding its product offerings. The combined entity is expected to gain meaningful scale in the auto supplier space, which should strengthen its competitive position and operational flexibility.
Khorsand also underscores that the merger’s operational synergies are poised to translate into stronger free cash flow generation beginning in 2027, driven by improved operating leverage. In parallel, he notes that American Axle’s recent adjustment to its bidding strategy, though it has pressured 2025 sales, is designed to bolster margins and cash flow rather than chase lower‑quality revenue. Despite this focus on profitability, the stock currently trades at levels more typical of distressed companies, even though the business remains profitable and is producing positive free cash flow. Khorsand believes this disconnect between fundamentals and valuation supports a Buy rating, with meaningful upside potential as the merger benefits and cash flow improvements materialize.
In another report released on January 22, RBC Capital also maintained a Buy rating on the stock with a $12.00 price target.