HMS Networks (Buy, TP: SEK455.00) - BUY ahead of next upcycle
A double-digit headline miss on Q3 orders, offset by a double-digit consensus EBIT beat, did not startle investors, and thus we believe the share price could be range-bound near-term until we receive fresh signals that the backdrop is not weakening. We still expect investor focus to shift to potential QOQ order improvements in early 2024e, acting as a catalyst, as seen historically. The valuation may appear punchy given negative EPS growth in 2024e, but we believe investors should buy quality in HMS Networks when the market is nervous. We reiterate our BUY but have cut our target price to SEK455 (475).HMS Networks AB (HMS) is a Sweden-based company engaged in the provision of communication technology for industrial automation. The Company provides solutions to connect industrial devices to networks and products enabling interconnection between different industrial networks. The Company's products are classified into two brands, namely Anybus and Netbiter. HMS, under the brand name Anybus, manufactures and markets intelligent communication technology for machines and electrically controlled equipment. Under the brand name Netbiter it develops and sells communication equipment that facilitates remote management through the Internet, either via the fixed telephony network or the mobile telephony network. The Company operates through numerous subsidiaries, including HMS Industrial Networks AB, IXXAT GmbH, a supplier of communication technology for industrial automation, machine manufacturing and the automotive industry, as well as eWON SA.
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