Rising costs require patience
We find Avanza’s recent financial performance disappointing, including a 15% YOY earnings decline in Q3. We have adjusted down our 2017–2019e EPS by 6–7% and our target price to SEK420 (450). We keep our BUY recommendation and positive view on the long-term case, reassured by the strong underlying growth trends that stayed evident in Q3 and encouraged by future positive triggers including the launch of the new mortgage product and higher interest rates, which both should support earnings growth 2018.Avanza Bank Holding is the holding company of the Avanza Bank Group. Co.'s offerings comprise of: brokerage services, which enable investments in Swedish and foreign equities, bonds, funds, derivative financial instruments including futures, warrants and options, investment advisory services, pension products, pension insurance, as well as capital insurance services. Co. targets private individuals, high net-worth customers, corporate customers, day traders, fund managers and institutions.
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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