On track for a strong run in FY'25

Q2: Strong overall

Volvo (Sell, TP: SEK280.00) - SELL on margin normalisation

We have downgraded to SELL (HOLD) and cut our target price to SEK280 (305), based on a 2025e P/E of 12x (in line with the 10-year average). We expect adj. EPS to fall by 13% in 2025e, and have lowered our 2025–2026e adj. EBIT by 4–5%, now c16% below consensus, which we believe fails to reflect the ongoing price/mix normalisation. For Q1e, we are 7% below consensus on adj. EBIT (but roughly in line on orders and deliveries), and believe Volvo will lower its 2025 truck market guidance for North America.

Bonava (Hold, TP: SEK10.00) - Another chance to convince

Bonava is due to provide an update on its business plan and strategy at its CMD in Stockholm (27 March). So far, it has not met the financial or operational targets presented at its last CMD, and we note its history of changing its targets; we believe it will be down to results to convince. With our expectation of negative EPS for 2025–2026, and a potential recovery in 2027, we continue to find a better risk/reward elsewhere in the sector. We reiterate our HOLD and SEK10 target price.

Deepwater fixture activity set to increase

After a slow start to the year for deepwater awards, we see long- and short-term jobs nearing rig selection. On the positive side, we believe the capital markets will appreciate increasing fixture activity and oil companies committing to long-term development jobs, supporting cycle duration. From a dayrate perspective, we see the bifurcation thesis unfolding, as some contractors are more focused on prioritising utilisation, also with counterparty, rig quality and region playing a role. Hence, as some of the upcoming awards are in more competitive markets (West Africa, South America), we expect...