Atlas Copco (Hold, TP: SEK570.00) - Demand solid but margins lagging
Continued strong demand in Q4 was overshadowed by weak operational leverage on mounting costs relating to supply-chain issues. Although we view the issue as temporary and expect adj. EBIT to increase by >20% YOY in 2022, we have cut our target price to SEK570 (640). This corresponds to a 2022e EV/EBIT of 24x – reflecting recent declines in peer valuations and rising interest rates. We reiterate our HOLD.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).
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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