Hexagon (Buy, TP: SEK140.00) - FCF set to catalyse re-rating
We are 3% below Infront consensus Q1e EBIT and will focus on 1) organic growth deceleration, and 2) continued FCF improvements (we are 6% above Visible Alpha consensus). For 2024, we see Hexagon outperform as it demonstrates its hallmarks despite cyclical headwinds: 1) defensive 6% organic growth YOY; 2) richer gross margin and benefits of cost savings to drive margin expansion for ~9% YOY EPS growth, with potential upside from M&A; and 3) improved cash conversion to set up 29% YOY FCF growth. We reiterate our BUY and SEK140 target price.
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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