September Swedish gaming tax

September showed solid progress for state-owned betting incumbent Svenska Spel while Kindred and LeoVegas’s recent positive trends were reversed. Looking ahead, we expect 1) more signs that the Swedish market is concentrating towards leading brands; and 2) in addition to high season for gaming, the recent closure of unlicensed operator Mobilebet could support the licensed market and brands such as LeoVegas, Kindred, and Betsson.

Northern Lights

LeoVegas (Buy, TP: SEK52.00) - Back to earnings growth

We expect EBITDA growth to return from H2 (25% in Q3e), which is quite an achievement given the sizeable Swedish exposure (18% revenue tax since 1 January). We believe healthy growth in Sweden, Rest of Europe and World coupled with better cost control more than offset the still-challenging UK business. Further signs that LeoVegas is executing well in absorbing the rising duties/gaming tax should support the share price and we reiterate our BUY and SEK52 target price.

Metsa Board (Buy, TP: EUR11.00) - Scope for a revaluation

With ample evidence of improved demand for paper board and a better price outlook for market pulp, we believe earnings headwind has now turned into a tailwind. We also expect earnings to be driven by incremental volumes after capacity expansions at existing mills. After ambitious investments over the past three years, the company’s paper board capacity is up c25%, while its net long pulp position has increased by close to 30%. We have upgraded to BUY (HOLD) and raised our target price to EUR11 (7.7) on our increased estimates including higher dividends.

BioArctic (Buy, TP: SEK350.00) - Limited news on EU approval

The Q1 report was in line with expectations, with a small beat on the operating loss. The cash position at end-Q1 was nearly SEK1bn. There was limited news on the delayed EU approval (waiting on a SAG meeting). Eisai recently guided for Leqembi sales of JPY56.5bn (year to March 2025), implying royalties to BioArctic of cSEK360m. We reiterate our BUY and SEK350 target price.

Surgical Science (Buy, TP: SEK230.00) - Weaker than expected start to 2024

The weak Q1 results, with sales and adj. EBIT below our estimates, were largely due to a significant slowdown in Educational products. We have marginally revised our 2024–2026e on the strong management outlook for 2024, and reiterate our BUY and SEK230 target price. We believe the weak share price reaction on the report presents an opportunity for long-term investors.