Sandvik (Buy, TP: SEK265.00) - Buy on weakness
Although a weakening cycle has been a key focal point for investors since the summer, Sandvik’s soft Q3 report with weak demand for the cutting tools business on the back of a “weak macro environment” and high uncertainty for short-term demand, seem to have caught some off guard. We believe the short-term uncertainty is a buying opportunity as we see PMIs near a trough and an attractive risk/reward at a 2025e EV/EBIT of 12.1x. We have cut our 2024–2026e adj. EBITA by 2% on lower organic growth, but reiterate our BUY. We have lowered our target price to SEK265 (270).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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