Analyst Note| Richard Hilgert |
After reviewing narrow-moat Autoliv’s revenue and margin targets from its capital markets day, our $94 fair value estimate is unchanged. From 2022 to 2024, management targets revenue growth at 4 percentage points above the growth of global light vehicle production. This compares to 3-4 percentage points growth over market forecast at its November 2019 capital markets day, covering a medium-term three to five years. Beyond 2024, management’s objective is 4%-6% organic revenue growth, which we surmise is slightly better by at least 2 percentage points versus the previous target for “growth at least in line with the market.” Our long-term global light-vehicle demand forecast is for 1%-3% average annual growth. Using 2019 as the base year, we model an average of 6% revenue growth over our five-year forecast, including an 11% rebound in 2021, followed by a return to more normalized global light-vehicle production in 2023. Our Stage I Autoliv revenue growth forecast is roughly 4 percentage points above the midpoint of our long-term demand forecast.