SKF (Buy, TP: SEK185.00) - Estimates reset – but still attractive
We have cut our 2023–2024e adj. EBIT by 12% to better reflect a cyclical slowdown, but still find SKF attractively valued, trading at a 2023e EV/EBIT of 7.2x. We see upside potential from the ongoing cost-cutting, while our lowered SEK185 (220) target price assumes a 15–20% discount to historical EV/sales and EV/EBIT multiples, underlining that, in our opinion, the market is pricing in an overly bearish outlook. BUY reiterated.AB SKF is the parent company of the SKF Group, which supplies products, solutions and services within rolling bearings, seals, mechatronics, services and lubrication systems. Services include technical support, maintenance services, condition monitoring, asset optimization, engineering consultancy and training. Co.'s business areas are: SKF Industrial Market - Strategic Industries, which includes bearings and bearing accessories and lubrication systems; SKF Industrial Market - Regional Sales and Service, which develops SKF Solution Factory facilities providing engineering capability; and SKF Automotive, which develops and manufactures bearings, seals and related products and services.
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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