DnB Markets - Atlas Copco AB Class A (ATCO A) Atlas Copco (Buy, TP: SEK205.00) - VT recovery nowhere to be seen

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DnB Markets

Mattias Holmberg

EUR 454.34 For Business Accounts Only

Atlas Copco (Buy, TP: SEK205.00) - VT recovery nowhere to be seen

The expected recovery in Vacuum Technique (VT) orders did not materialise, and investors’ negative view of the report was exacerbated by weak underlying profitability for the division (adjusting for an FX boost). Beyond VT, the report was ‘good enough’ in our view, but we have trimmed our 2025–2026e adj. EBIT by c2%. Although Q4 did not provide the confirmation we were hoping for, we still expect 2025 to be a solid year for VT, with demand set to recover. We reiterate our BUY and SEK205 target price.

28/01/2025 1 EN

Underlying

Atlas Copco AB Class A

Atlas Copco provides industrial productivity products and services. Co.'s operations are divided into four business areas: Compressor Technique (provides compressors, vacuum solutions, gas and process compressors and expanders, air and gas treatment equipment and air management systems), Industrial Technique (provides power tools, assembly systems, quality assurance products, software and service through a global network), Mining and Rock Excavation Technique (provides equipment for drilling and rock excavation), and Construction Technique (provides construction and demolition tools, portable compressors, pumps and generators, lighting towers, and compaction and paving equipment).

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SE0011166610 Nasdaq Nordic Stockholm Sweden

Provider

DnB Markets

DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.

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Analysts

Mattias Holmberg

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DnB Markets

Atlas Copco (Buy, TP: SEK180.00) - Shelter from the storm in Vacuum

We are 2% below consensus on Q1e orders, sales and adj. EBIT, and expect a near-term demand guidance for unchanged or slightly weaker customer activity. We forecast improved sentiment for Vacuum Technique through 2025, and see strong long-term growth prospects. Due to FX, we have reduced our 2025–2027e orders and sales by 7% on average and adj. EBIT by 8% on average. We have thus cut our target price to SEK180 (205), but reiterate our BUY.

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April 1, 2025 April 1, 2025 1 EN

DnB Markets

Set for spicy growth

Our recent field trip to India (visiting Volvo, Epiroc, Trelleborg, Autoliv and others) alongside our analysis suggests the country is set to take centre stage as a global manufacturing hub over the coming decade, shifting from being the sixth- to the third-largest end-market for the Swedish Industrial sector. India’s strong economic growth trajectory and favourable demographics mean the companies: 1) see double-digit growth as sustainable; 2) are pursuing manufacturing capacity expansions; and 3) have created global R&D hubs in India to access its large talent pool.

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March 10, 2025 March 10, 2025 1 EN

DnB Markets

Who stands to benefit?

A potential peace deal between Russia and Ukraine could unlock one of the largest reconstruction efforts in modern history. The World Bank estimates Ukraine will need USD486bn in rebuilding efforts over the next decade, but we estimate this would add only c2% to annual European construction spending. While the direct earnings effect may be modest, we expect the “rebuild Ukraine theme” to drive investor sentiment. We see Volvo, Epiroc, Hexagon, Metso, Hiab and ABB as some of the primary beneficiaries across multiple phases of a reconstruction, with several more also poised to benefit.

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February 17, 2025 February 17, 2025 1 EN

Yubico (Buy, TP: SEK275.00) - Second noisy quarter in a row

We see Yubico as a continued beneficiary in this heightened cybersecurity threat landscape. The short-term momentum of our thesis has come down amid tougher comparables and a higher burden of proof, while we expect soft Q1 results. For investors willing to look beyond the short-term noise, we believe most negatives are factored in (it is the fifth-most shorted stock on the Stockholm Main Market), and we expect it to reverse the bearish sentiment in 2025. We reiterate our BUY, but have cut our target price to SEK275 (310).

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20h / 15m 20h / 15m 1 EN

Niclas Gehin

Niclas Gehin

Kongsberg Gruppen (Hold, TP: NOK1450.00) - Less European exposure than peers

We expect Q1 EBITDA of NOK2.2bn (results due at 07:00 CET on 8 May). Kongsberg Gruppen’s valuation premium to European defence peers has shrunk as peer multiples have converged on expectations of higher European defence spending. We believe this is warranted by its lower share of defence sales to EU countries. We continue to find the valuation demanding, while struggling to see negative share price catalysts. Hence, we reiterate our HOLD while we have raised our target price to NOK1,450 (1,300).

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21h / 42m 21h / 42m 1 EN

Simen Mortensen

Simen Mortensen

Mixed upside potential, despite market recovery expectations

Pent-up demand and falling interest rates remain the backbone for newbuild recovery expectations. However, as the recovery has not yet started, property developers screen as the most attractive long-term, but visibility remains mixed. Diversified construction companies are more attractive on near-term P/Es, although many seem to be fully valued on solid share-price performance over the past six months. We maintain a neutral sector view; NCC and Skanska are our top picks.

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April 9, 2025 April 9, 2025 1 EN

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Atlas Copco (Buy, TP: SEK205.00) - VT recovery nowhere to be seen

Atlas Copco (Buy, TP: SEK180.00) - Shelter from the storm in Vacuum

Set for spicy growth

Who stands to benefit?

Yubico (Buy, TP: SEK275.00) - Second noisy quarter in a row

Kongsberg Gruppen (Hold, TP: NOK1450.00) - Less European exposure than peers

Mixed upside potential, despite market recovery expectations

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