HMS Networks (Buy, TP: SEK600.00) - Winds of change for 2025e
Weak end-markets and HMS Networks’ high gearing are in focus, but we expect concerns to fade by H1 2025 on: 1) conviction in an organic order recovery; 2) 93% adj. EPS growth YOY for 2025e, with our EBIT forecast 11% above Visible Alpha consensus enabling deleveraging; 3) M&A track record should be benchmarked to ‘darling’ compounders, which it outperforms on key metrics; 4) investor positioning is unlikely to turn more negative and estimates are de-risked; and 5) we see valuation support as the earnings momentum story builds. We reiterate our BUY and have raised our target price to SEK600 (515).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.
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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