Sandvik (Hold, TP: SEK220.00) - HOLD the shares, not your breath
We have downgraded to HOLD (BUY) and cut our target price to SEK220 (245). We believe Sandvik is a potential break-up story long-term but this is unlikely to materialise in a realistic time frame, while we find the SOTP upside potential to cSEK240/share less appealing than before. We favour SKF (BUY) over the SMM business for short cyclical exposure and would suggest investors hold Epiroc (HOLD) and Metso (BUY) over the SMR/SRP businesses for mining exposure. The Q3 results are due at 11:30 CET on 23 October.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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