Wachovia Reiterates a 'Market Perform' Rating on American Axle & Manufacturing (AXL); Raises 2010 Estimates

June 16, 2009 8:39 AM EDT

Wachovia reiterates a 'Market Perform' rating on American Axle & Manufacturing (NYSE: AXL). Valuation Range: $3.5 to $4

Wachovia analyst says, "We are raising our FY10 earnings estimate to $0.35 vs. our prior estimate of $0.06. Relative to our previous model, we increased our revenue outlook by $40M to $1.9B. However, we forecast operating margin to improve to 5.2% (+90bps vs. our prior forecast) driven by restructuring savings. Our revised EBITDA estimate is $253M (vs. $235M prior). Our new valuation range is $3.50-$4.00. Our new valuation range applies an EV/EBITDA multiple range of 4.7x-4.8x to our 2010 EBITDA estimate. We derive our 12-month valuation by applying an EV/EBITDA multiple range of 4.7-4.8x to our 2010 EBITDA estimate. Primary risks include the company's dependency on GM (NYSE: GM), reliance on SUVs and pickup trucks, high financial leverage, and less diversified geographic sales spread...Axle has a strong book of business through 2013, a robust portfolio of technologybased driveline products and systems, and a deep management team, in our view. However, the shares are lacking a clear catalyst(s) and, in our opinion, are appropriate only for investors with significant appetite for risk."

To see more analyst ratings on AXL Click Here.

American Axle & Manufacturing Holdings, Inc. (AAM) is a Tier I supplier to the automotive industry. AAM manufactures, engineers, designs and validates driveline and drivetrain systems, and related components and chassis modules for light trucks, sport utility vehicles (SUVs), passenger cars, crossover vehicles and commercial vehicles.

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