Baird Upgrades Autoliv On Autonomous Opportunity: 'Everything Is Now Falling Into Place'

The shift toward self-driving cars is expected to make numerous services unecessary and put a substantial number of people out of work. But Autoliv Inc. (NYSE: ALV)’s an exception, according to one market analyst.

The Rating

Baird Equity Research's David Leiker upgraded Autoliv to Outperform and increased his price target from $137 to $192.

The Thesis

The upgrade reflects growth potential in the core passive safety business and leadership potential for the electronics business in active safety and self-driving cars, Leiker said in a Wednesday note. (See the analyst's track record here.) 

The former is expected to see significant revenue boosts from market share gained through Takata’s product recalls, as well as more stringent global safety standards, the analyst said. And the electronics segment could profit from advanced active safety demands for autonomous vehicles.

“The group of Tier 1 suppliers capable of delivering Level 3-plus AND incremental development for autonomous driving is shrinking,” Leiker said. 

Baird projects that organic growth acceleration and rising profitability will lift Autoliv's valuation. 

“Based on strong 2018 guidance and a positive mid-term outlook provided at last year’s CMD, we believe everything is now falling into place for a more aggressive recommendation,” Leiker said. 

Price Action

Autoliv shares were up 1.69 percent at $152 at the time of publication Wednesday afternoon.

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Photo courtesy of Autoliv.