We cut our Q3 estimates

We are 16% below cons. on Q3e adj. EBITA. Negative short term R/R, but still attractive into 2025e.

HMS Networks (Buy, TP: SEK525.00) - Order recovery pushed out

We believe investors are increasingly seeking an entry point in HMS amid the ongoing cyclical correction in factory automation. In our view, orders have troughed, but recent outlook commentary from automation peers and customers suggests a recovery would be more gradual than pent-up, which could push a re-rating into 2025e. We reiterate our BUY but have cut our target price to SEK525 (530).

Japan MT orders: downtick in August

Lyko Group (Sell, TP: SEK95.00) - Waiting for further positive signs

For Q3, we are slightly above consensus on EBIT but below on net profit. We expect Lyko’s results to be weighed down by continuously high financial costs. In our view, focus will remain on its European market, the efforts to improve its group gross margin, and the cash flow position (net debt/EBITDA of c4.4x at end-Q2). We reiterate our SELL and SEK95 target price, reflecting its stretched balance sheet and our belief that it will take time to properly balance growth and profitability.

The weekly navigator

From the past week, we highlight: 1) we hosted investor lunches with the CEOs of Svolder and Byggmästaren at our Stockholm office; 2) we met with Investor, which is continuing to execute on its M&A agenda; 3) we met with VEF, which is seeing positive momentum for fintech VCs in its core markets of Brazil and India.

Bilia AB (Buy, TP: SEK150.00) - Recovery likely pushed to 2025

We are cautious ahead of the Q3 report, as a likely recovery in car earnings is pushed to 2025e, while we expect service earnings to be flattish on still-restrained consumer sentiment near-term. Nevertheless, with c+40% EPS growth in 2025e on a forecast new-car market recovery next year, we remain positive on the stock. We reiterate our BUY but have cut our target price to SEK150 (160), mainly on lower estimates.