Analyst Federico Merendi of Bank of America Securities maintained a Sell rating on American Axle, retaining the price target of $4.50.
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Federico Merendi has given his Sell rating due to a combination of factors impacting American Axle’s financial performance. Despite the company reporting an adjusted operating EPS of $0.16, which surpassed expectations, the core operating results were weaker than anticipated, missing the operating income line by $0.01 per share. Additionally, the revenue remained flat year-over-year and fell short of both Bank of America and consensus estimates, indicating challenges in achieving growth.
Another concern highlighted by Merendi is the increased interest expense associated with the Dowlais deal, which is expected to rise significantly, impacting the company’s financial outlook. Although the lower end of the 2025 guidance has been raised, the overall outlook remains cautious, with specific segments like Metal Forming showing a decline in revenue and a lower adjusted EBITDA margin. These factors collectively contribute to the underperformance rating, suggesting potential risks for investors.
Merendi covers the Consumer Cyclical sector, focusing on stocks such as Ford Motor, AutoNation, and Mobileye Global, Inc. Class A. According to TipRanks, Merendi has an average return of 2.3% and a 53.66% success rate on recommended stocks.