Jefferies has lowered its recommendation on Autoliv (NYSE:ALV) to "hold" and adjusted its financial projections downward, warning of mounting pressures that are likely to extend beyond the first quarter. The brokerage now models first-quarter sales of $2.6 billion and EBIT of $212 million, which implies an 8.1% margin and sits broadly in line with the market consensus EBIT of $209 million.
For full-year 2026, Jefferies trimmed its EBIT forecast by 8% to $1.1 billion, a figure that is roughly 4% below consensus expectations of $1.15 billion. The firm also cut its estimates for the subsequent years, reducing projections by 4% for both 2027 and 2028 and now forecasting EBIT of $1.25 billion for 2027 and $1.35 billion for 2028.
The downgrade and forecast revisions reflect a set of operating concerns flagged by Jefferies' analysts. They wrote that they anticipate an "elevated call-off environment, weaker mix & lower overall LVP in response to higher fuel prices," and that they expect cuts to LVP expectations through the second quarter. In short, the brokerage expects demand patterns and product mix to deteriorate as cost pressures build.
Jefferies identified several headwinds it believes will pressure margins and results. Supply chain disruption tied to tensions in the Middle East is cited as a source of potential production volatility and material availability issues, with aluminium among the materials called out. The firm quantified tariff exposure at approximately $100 million, attributing that to products falling below the 70% local content threshold under USMCA rules and noting that this could create timing differences between quarters.
Raw material cost increases were highlighted as a larger negative than previously assumed, with Jefferies estimating a gross impact of about $30 million. The brokerage specifically pointed to increases in gold and other metals, along with oil-driven pressures on plastics. It also noted that cost pass-through to customers is supported by indexation coverage of more than 50%, a meaningful increase from roughly 20% over the past five years.
Regionally, Jefferies described near-term demand in China as weak, estimating a roughly 12% year-on-year decline in the first quarter. The brokerage also observed that share repurchases were paused in the first quarter, with no buybacks executed versus $250 million repurchased in the second half of 2025. Nevertheless, the existing $2.5 billion repurchase authorization through 2029 remains intact, with an annual repurchase target of $300 million to $500 million.
Reflecting the lower earnings outlook and a reduced valuation multiple, Jefferies cut its price target to $120 from $150, a 20% reduction. The firm said this adjustment incorporates about a 5% reduction to its 2027 earnings estimate and a lower valuation multiple of roughly 10x, down from 12x previously.
Context summary
Jefferies' revision of Autoliv's rating and forecasts centers on weaker demand dynamics, increased input costs and tariff exposure, along with the potential for supply volatility. The firm has pushed down short- and medium-term EBIT estimates and reduced its price target accordingly, while noting that some cost pass-through is supported by increased indexation coverage.