Kitron (Buy, TP: NOK42.00) - Recovery still in the early innings
While Q2 revenue was slightly below our estimate and consensus, EBIT significantly beat consensus, as Kitron demonstrated its ability to adjust operations for lower demand. Despite the recent re-rating of the stock, we argue there is still upside potential from a normalisation of downstream inventory levels and a more broad-based market recovery, which could prompt our 2025 estimates to move higher. Thus, we reiterate our BUY and have raised our target price to NOK42 (37).Kitron and its subsidiaries comprise one of Scandinavia's enterprises in the development, industrialisation and manufacturing of electronics for the data/telecom, defence/marine, medical equipment and industry segments. The group has operations in Norway, Sweden, Lithuania and China. Co.'s activities are characterised by complex manufacturing processes and expertise. Co. has chosen to focus its sales and marketing activities within the Data/Telecom, Defence/Marine, Medical equipment and Industry market segments. Customers typically provide products or equipment for professional use. Co. is a typical high mix low volume Electronic Manufacturing Services company.
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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