Paradox Interactive (Buy, TP: SEK260.00) - Good entry point on negative news

Q1 marked a soft start to 2024, which together with the recent negative news flow (game delays, technical issues in Cities: Skylines 2) has created a good entry point in the sector’s quality name. We are confident in the long-term profitability of the core portfolio, and like the optionality from new games like ‘Life by You’, set for release in Q2. We reiterate our BUY, but have trimmed our target price to SEK260 (270) on 7–5% lower 2024–2025e EBIT.

Good value, but lacking positive triggers

Near-term outlook still muted (tough comps high cons.) but long-term sector winner with 25% EPS CAGR '23-'26e. Reiterate BUY, TP of SEK 200 (210); 13-11x EV/EBITDAC '25e-'26e.

A tad softer growth and profitability in Q1

Nokian Tyres (Hold, TP: EUR9.00) - Soft Q1, with or without setbacks

The Q1 results were below our expectations, even after adjusting for the negatives on the group profit from the political strikes in Finland and the Red Sea conflict. On a positive note, the PCT price/mix was guided to hold up well, partly offsetting our revised lower sales expectations, while the Romanian factory appears to be ramping up on schedule. We reiterate our HOLD but have cut our target price to EUR9.0 (9.5), after lowering our 2024–2026e clean EBIT by c6% on average.

Lyko Group (Sell, TP: SEK95.00) - Stretched balance sheet

Following the Q1 report, we believe Lyko will not only have to make more substantial progress in balancing growth and cost control, but also consider new funding options more seriously. With financial expenses eating up earnings, its current debt position, and stretched balance sheet (net debt/EBITDA c4.6x), we have downgraded to SELL (HOLD) and cut our target price to SEK95 (128).

Resurs Holding (Buy, TP: SEK18.00) - Resur-recting the case

The market appears to be pricing in credit losses remaining high for many years, but we see the potential for declines starting in mid-2024, with early positive signs in March. We also find it likely that margins will be stable from here, which is not reflected in consensus. At a P/E of 3–4x for 2025e, we see good risk/reward. We have raised our 2025–2026e EPS by 3–7%, our target price to SEK18 (15), and have upgraded to BUY (HOLD).