American Axle shares fall on 1Q results, ongoing strike
NEW YORK—Shares of American Axle & Manufacturing Holdings Inc. fell Monday, after the auto supplier reported a $27 million first-quarter loss, blaming a two-month-long strike and a drop in light truck production.
American Axle said Friday it lost an estimated $133 million in sales and nearly $46 million in operating income because of the strike, which started on Feb. 26 and shut down the company's five original U.S. factories in Michigan and New York.
American Axle shares fell 28 cents, or 1.3 percent, to close at $20.68, after dropping to $19.75 earlier in the day. Over the past 52 weeks, the company's shares have traded between $15.73 and $31.
Baird analyst David Leiker said that excluding the effects of the strike, American Axle's results were still well below expectations. He reiterated a "Neutral" rating and advised investors to avoid the company's shares at current levels.
"(We) remain concerned about long-term prospects, given exposure to negative secular shift away from frame-based pickups, sport utility vehicles (80 percent of revenue)," Leiker wrote in a note to investors.
"Shorter term, we believe the shares represent an intriguing short-term idea near $15, where we believe potential labor cost savings would be under-discounted."
KeyBanc's Brett D. Hoselton cut his price target for the company by $9 to $31 and reduced his earnings estimates for the next three years to account for the effects of the strike.
But Hoselton continues to rate the shares "Buy," saying that they should still get a significant boost from lower labor costs down the road.
"While the timing of the American Axle-UAW negotiations remains uncertain, we continue to believe (based on conversations with numerous sources) that savings will be approximately $50,000 per person," Hoselton said. "This should boost earnings by an estimated $2 per share, which we continue to believe will be retained by American Axle."
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