Outotec (Buy, TP: EUR7.60) - A better entry point
Q1 sales were in line with consensus, but EBIT missed, as margins were hampered by legacy projects in MEW. Profitability in Minerals Processing was strong, with the EBIT margin exceeding consensus despite lower than expected sales. In our view, restructuring and new MEW orders should eventually offset the losses from legacy projects. We see the recent share price decline as offering a better entry point and have upgraded Outotec to BUY (HOLD) with a EUR7.6 target price.Outotec is a global provider of process solutions, technologies and services for the mining and metallurgical industries organized in four divisions. The Minerals Processing division provides concentrator plants, process solutions and services for ore concentration, the minerals and fertilizer industry, energy sector and water treatment. The Base Metals division provides metallurgical processing technology for copper, nickel, zinc, precious metals and ferroalloys. The Metals Processing division develops and supplies technologies and services for the production of iron, alumina, aluminum and synthetic rutile. Larox develops and delivers industrial filters for separating solids from liquids.
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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