Hexagon (Buy, TP: SEK140.00) - Short story closed
The FCF improvements in Q4 mean we can put the main short report criticism behind us. Looking to 2024, we expect Hexagon to show its hallmarks despite cyclical headwinds: 1) defensive 6% organic growth YOY; 2) a richer gross margin and the benefits of cost savings driving margin expansion, leading to ~9% YOY EPS growth with upside potential from M&A; and 3) improved cash conversion to set up FCF growth of 28% YOY. We reiterate our BUY and have raised our target price to SEK140 (135).
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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