Freedom initiates coverage of Autoliv with a “Buy” recommendation

Freedom Broker has initiated analytical coverage of Autoliv (ALV) with a “Buy” recommendation and a target price of $139 per share. Relative to the $113.92 price used in the report, the target implies upside potential of about 22%. Autoliv produces airbags, seatbelts, steering wheels, and other passenger-safety systems for automakers. Analysts Alinur Beisenbay and Dmitry Pozdnyakov believe that weak expectations for 2026 conceal the potential for a notable improvement in the company’s results in 2027.

Why the 2026 outlook looks weak

Autoliv expects zero organic sales growth in 2026. Additional pressure on reported earnings will come from costs related to reorganizing production in Turkey. Therefore, near-term results may not reflect the impact of measures the company is already taking to improve profitability.

Freedom forecasts Autoliv revenue at $11.07 млрд in 2026 and $11.6 млрд in 2027. Expected earnings per share over the same period will increase from $8.11 to $10.72. These are analysts’ estimates, not the company’s published results.

What could drive profit growth

One of the key factors is lower restructuring expenses and savings from changes in Turkey. By 2028, the company expects to bring the annual impact of these measures to about $40 млн. Freedom also expects a recovery in gross margin—the share of revenue remaining after production costs are deducted.

Another source of growth is orders from Chinese automakers and projects in India, for which production is expected to begin in 2027–2028. In Q2 2026, Autoliv’s sales to Chinese automakers rose by more than 40%, and in India by more than 35%. At the same time, framework agreements with certain partners still need to be converted into firm production orders.

What risks Freedom considers

The analysts’ base-case forecast assumes only a moderate recovery in global passenger-car production. To reach Autoliv’s target price, the company does not need to achieve management’s stated operating margin goal of 12%.

A sharper-than-expected decline in vehicle production could, however, reduce plant utilization. Other risks include delays in launching new programs, price pressure from automakers, and dependence on major customers. The next milestone will be Autoliv’s Q3 results, which are expected to be released on October 23.

The situation in the Asian auto market is also important for other companies analyzed by Freedom Broker. Earlier, analysts noted intensifying competition with Chinese manufacturers: in May, Toyota’s sales in China fell by 31.7%. Against this backdrop, Freedom also assessed the prospects for Li Auto, whose results depend on demand in the Chinese market and competition in the EV segment.

This is not an individual investment recommendation.