Autoliv's (ALV) Q2 sales beat was offset by weaker profitability in the Americas, but the company remains positioned for a Q4 margin recovery and longer-term growth in China, RBC Capital Markets said in a note Friday.

Adjusted earnings before interest and taxes of $270 million for Q2 was broadly in line with the $273 million consensus estimate despite sales of $2.80 billion exceeding expectations of $2.76 billion, the investment firm said.

RBC attributed the margin pressure to tariffs, an unfavorable regional mix and lower content on certain replacement vehicle models in the Americas.

Autoliv maintained its 2026 organic sales and EBIT guidance, which implies a Q4 margin of about 15.3%, the firm said. Customer recoveries on raw material costs, lower commodity headwinds, higher engineering income, internal cost improvements, and stronger volumes could support the expected margin increase, according to the note.

The firm highlighted Autoliv's growing exposure to Chinese OEMs, which accounted for 55% of its China sales, up from 40% a year earlier, as organic sales to those customers rose about 44%.

RBC kept an outperform rating on Autoliv and lowered its price target to $147 from $148.

Shares of Autoliv were down 1.8% in Monday trading.

Price: 118.15, Change: -2.11, Percent Change: -1.75