Autoliv Inc. (ALV) is witnessing positive earnings growth by shifting production to low-cost regions and increased safety needs. Shares in global markets are increasing. However, difficult conditions in North American and West European automotive markets, as well as pricing pressure from original equipment manufacturers (OEM), are undermining Autoliv’s near-term prospects. Hence, we rate the stock a Hold with a target price of $34.50.

Autoliv is set to grow globally by entering into partnerships and making acquisitions while introducing new safety products and streamlining its operations to cut costs. The company has a 40% global market share in airbags. The European market share is 65% and the North American market share for airbags is 38%. For seat belts, market share in North America rose to 28%, in Europe to 62%. Airbag and seatbelt market share in Japan has increased to 16%.

At a time when car volumes are expected to remain flat/down in the U.S. and Europe, Autoliv is delivering solid results due to the trend towards greater safety content. Content per vehicle has been steadily growing, and now stands at $240 per vehicle (about 1% of the value of the average car). Content per vehicle is about $300 in North America and Europe, while it is only $80 in other areas of the world. If the rest of the world came up to North American levels, this could add $0.50 to EPS.

Read the full analyst report on ALV

“ALV” Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

Last 5 posts by Zacks Market Commentaries

• Steel Dynamics Raises Debt - Analyst Blog - March 19th, 2010
• DuPont Focus on Plant Genetics - Analyst Blog - March 19th, 2010
• Ford Receives Grants - Analyst Blog - March 19th, 2010
• HD to roll out Spring Black Friday - Analyst Blog - March 19th, 2010
• PPL Awards $70M Contract, Builds Jobs - Analyst Blog - March 19th, 2010