Modest earnings recovery in 2025e

Kesko (Buy, TP: EUR23.00) - Paradigm shift

Q3 earnings beat consensus across the board, primarily driven by growth in Building and Technical Trade (BTT) Finland profit, as we expected. Another highlight was the resilient Grocery Trade (GT) profit margin (flat YOY), further increasing our confidence in Kesko’s strategic execution in the segment. We reiterate our BUY, and have increased our target price to EUR23 (20), following c3% average increases to our 2025–2026e clean EPS. We continue to highlight the appealing 2024–2026e dividend yield of c5%.

A solid set of Q3 results

Oncopeptides (Buy, TP: SEK2.50) - Germany leads Q3 sales miss

Q3 sales were roughly half the level we expected – admittedly from a small base, but still a concern for us, since the miss was led by Germany, with much slower growth than recently. However, operating expenses were also less than we forecast, leaving an operating loss of SEK61m, a fraction better than our cSEK-63m. End-Q3 cash was SEK250m, which the company said would see it to positive cash flow in 2026e. We reiterate our BUY but have cut our target price to SEK2.5 (4.5) on increased uncertainty about the sales ramp up.

Norske Skog (Buy, TP: NOK32.00) - Unfounded concerns

Since the Q3 report that showed that Norske Skog is in good shape in difficult markets, the share price is down c40% on apparent concerns that Norske Skog will become financially distressed. However, after scrutinising the balance sheet and the debt payment structure, we believe the situation is under control. With our earnings forecasts largely intact, we have upgraded to BUY (HOLD) and reiterate our NOK32 target price following the recent share price weakness, in our view based on unfounded concerns and misunderstanding.

Valuation and market update

In this note, we show updated valuation and market statistics for the Offshore Drilling sector.