Hexagon Minor model adjustments
Ahead of Hexagon’s Q2 results (due on 26 July), we have made marginal calibrations to our estimates to factor in FX movements and the company’s acquisition of Voyansi. We do not consider these changes to be material and have not changed our BUY recommendation. We reiterate our SEK140 target price. We believe muted organic growth YOY (our forecast 2.9%; Infront post-Q1 consensus 3.7%) in hardware divisions Geosystems and Manufacturing Intelligence could steal the attention, which leaves our Q2e EBIT 3% below consensus, but believe this mix could set-up a FCF beat (Q2e operating cash flow: EUR253m, with 88% cash conversion and 55% YOY growth). After Q2, we believe investors can look for market recovery and easier comparables-driven acceleration in organic growth to challenge the stock’s YTD underperformance and its low absolute and relative valuation of 18x 2024e EV/EBIT (10-year average of 20x).
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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