SKF (Buy, TP: SEK230.00) - In a sweet spot for 2018
We reiterate our BUY recommendation and have raised our target price to SEK230 (220) on the back of 5% higher EBIT estimates for 2018-19, due to 0.6% higher price/mix assumptions. We believe that with 10–20% spare capacity SKF is well placed to benefit from the current cyclical upturn. We also expect earnings support from streamlining and production footprint investments; this should in our view generate a 2018–2019 EBIT CAGR for SKF of 8%. Our 2018–2019e EBIT is c5–7% above consensus.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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