FBR Capital Downgrades American Axle (AXL) to Underperform; 31% of Long-Lived Assets in Mexico
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FBR Capital downgraded American Axle (NYSE: AXL) from Market Perform to Underperform with a price target of $12.00 (from $16.00) following Trump victory and SAAR plateau.
Analyst Christopher Van Horn commented, "American Axle has 31% of its long-lived assets in Mexico, per the latest filings. The company derives about 27% of its revenue from customers based there. In our view, this means that Trump's potential disruption of NAFTA presents a substantially higher risk to American Axle than it does to certain other suppliers. Sentiment in this stock weakened on the heels of the planned acquisition of Metaldyne Performance Group, which we discussed in a note last week (available here). Given the challenging environment that AXL shares already faced, we believe that until Trump's trade policy becomes clearer, American Axle could underperform its peers. We reduce our rating to Underperform from Market Perform, and our price target to $12 from $16. This new level represents a more highly risked equity value for AXL shares going into the Metaldyne transaction"
Shares of American Axle closed at $13.76 yesterday.
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