AF Gruppen (Sell, TP: NOK120.00) - The ripple effects could be worse

After the Swedish Transport Administration on 19 February stated it was terminating its contract with AF Gruppen for the ongoing E4 Bypass Stockholm project – pointing to contract violations so serious that it intends to file police charges – we have eliminated the order from our backlog and cut our 2025e EPS by c5%. However, if found guilty of the violations in the legal process, we see even greater downside risk that in a worst-case scenario could include the company being excluded from public tenders. We reiterate our SELL and NOK120 target price.

Higher uncertainty — down to HOLD

Sandvik (Hold, TP: SEK210.00) - Estimates cut due to FX

We are 3% below post-Q4 consensus on Q1e orders and adj. EBITA. We expect comments on demand to remain solid for Mining and soft for Infrastructure. Early trading remarks for daily order intake in SMM for the first few weeks of Q2 are likely to indicate a stable QOQ trend, but that overall short-cycle demand comments could be subdued given the uncertain macroeconomic picture. Having lowered our 2025–2027e adj. EBITA by 9% on average (mainly due to FX), we reiterate our HOLD, but have cut our target price to SEK210 (235).

Alimak (Hold, TP: SEK140.00) - Mean reversion

We are in line with post-Q4 consensus on Q1 sales and adj. EBITA, as we forecast sales of SEK1,800m and an adj. EBITA margin of 18.2% (Q1 2024 16.4%). We expect a sequential decline in the Facade Access adj. EBITA margin, as it was boosted by contingency releases booked in Q4, but a recovery in Construction. We have lowered our 2025–2027e sales by 5% and adj. EBITA by 7% on average due to FX. We reiterate our HOLD and SEK140 target price.

ABB (Buy, TP: SEK600.00) - BUY on recent weakness

We have upgraded to BUY (HOLD), but cut our target price to SEK600 (660), as we believe recent market volatility offers a good entry point in a quality name. Although uncertainty has increased around its Data Centre exposure, we see ABB as well “positioned” for variety from an end-market perspective, and are roughly in line with consensus for Q1e. We expect ABB to reiterate its 2025 guidance and give Q2 guidance for low- to mid-single-digit organic sales growth YOY and a broadly stable operating EBITA margin YOY.