Hexagon AB (Buy, TP: SEK155.00) - Drivers offset macro challenges
Despite a higher base, tougher comparables, and lower margin gains than seen in 2020–2021, we expect 7% organic revenue growth and 20% EBIT growth YOY in 2022, with support from: 1) end-market-weighted capex indicating ~9% YOY growth; 2) pricing power, which should offset cost inflation; and 3) predictable incremental margins from ~60% software and services revenues, providing earnings and cash-flow resilience. We reiterate our BUY, but have raised our target price to SEK155 (150), as we have lifted our 2022–2023e adj. EPS by 2–3% to reflect positive currency effects and the acquisition of ETQ.
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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