Electrolux (Sell, TP: SEK235.00) - Getting overcooked
With the share price up 14% in October, we believe the market has got a bit carried away on Electrolux. We reiterate our SEK235 target price but have downgraded the stock to SELL (HOLD), as: 1) Professional Products’ earnings and volume volatility make it hard to justify a premium valuation to peers; 2) remain-co has averaged organic growth of c1% and an EBIT adj. margin of 4% since 2006, underperforming peers; and 3) consensus has historically overestimated net cost savings and next year’s earnings.AB Electrolux sells home appliance for households and businesses, with products such as refrigerators, dishwashers, washing machines, cookers, vacuum cleaners, air conditioners and small domestic appliances under brands such as Electrolux, AEG, Zanussi, Frigidaire and Electrolux Grand Cuisine. Co. has six segments: Major Appliances Europe, Middle East and Africa; Major Appliances North America; Major Appliances Latin America; Major Appliances Asia/Pacific; and Small Appliances, which comprise the products for consumer durables market; and Professional products. Co.'s professional products include food-service equipment for hotels, restaurants and institutions, as well as laundry 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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