BWS Financial has initiated coverage of American Axle & Manufacturing (NYSE: AXL), assigning a Buy rating and setting a price target of $17.00. The research firm frames the call around the company’s pending combination with Dowlais Group plc (OTC: DWLAF), a transaction it says will diversify American Axle’s customer base among automotive original equipment manufacturers and expand both geographic reach and product breadth.
The merger is in its final stage, according to BWS Financial. Regulators in China have approved the deal through the State Administration for Market Regulation, and the parties have announced the merger is expected to close on February 3, 2026, subject to court sanction. The company has also disclosed a rebrand to Dauch Corporation, effective January 26, 2026, and will begin trading under a new ticker, NYSE: DCH, on February 5.
BWS points to measures the company has taken to improve gross margins through changes in its bidding process. Those actions, the firm notes, coincided with a decline in sales during 2025 while free cash flow rose. InvestingPro data cited by the research house confirms a weak gross profit margin of 12.3% and reports that American Axle generated $170.5 million in free cash flow over the last twelve months.
Liquidity metrics are characterized as adequate. InvestingPro shows a current ratio of 1.77, which the analysis treats as sufficient to manage operations through the transition period surrounding the merger. Valuation metrics attract additional attention: InvestingPro analysis indicates a PEG ratio of 0.51 and an EV/EBITDA of 4.19, figures BWS interprets as valuations commonly associated with distressed firms despite American Axle’s profitability and positive free cash flow.
BWS projects a material lift in free cash flow beginning in 2027 as the combined company realizes expected synergies and expanded market access. The research note references supplementary research content available behind subscription, identifying 11 additional investment tips in a Pro Research Report.
Outside BWS’s initiation, other analyst activity has been reported. RBC Capital increased its price target on American Axle to $12.00 from $9.00 while maintaining an Outperform rating. Stifel reiterated a Hold rating and kept its price target at $7.00. Company operational commentary indicates a recent quarterly performance that management characterized as a solid beat - with revenue roughly in line with expectations and especially strong EBITDA results in the Driveline segment.
Taken together, these developments offer investors a multifaceted view: an initiating Buy from BWS that emphasizes post-merger cash flow potential, mixed analyst targets from other firms, and operating metrics that show constrained gross margins but improving free cash flow and adequate liquidity.