Sandvik (Buy, TP: SEK190.00) - Attractive drivers
We reiterate our BUY recommendation and SEK190 target price. We have raised our forecast by 2–3% from higher margin assumptions in SM&RT and currency. Our investment case in Sandvik is based on 5–7% higher EBIT forecast than consensus, new financial targets during H2 2018 or H1 2019, M&A and a rich valuation for Epiroc could trigger higher valuation for Sandvik. Further, we see the valuation as attractive versus the Swedish capital goods sector. Results are due at 12:00 CET on 17 July.Sandvik is organized into five business areas: Sandvik Mining, Sandvik Machining Solutions, Sandvik Materials Technology, Sandvik Construction and Sandvik Venture. Sandvik Mining specializes in equipment, tools and service for the mining industry. Sandvik Machining Solutions focuses on tools and tooling systems for metal cutting. Sandvik Materials Technology specializes in products made from stainless steel grades and special alloys. Sandvik Construction specializes in equipment, tools and service for the breaking, drilling and crushing niches. Sandvik Venture generates value by promoting growth of small and medium-sized businesses of particular interest to the Sandvik Group.
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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