Storskogen - Initiation of coverage - Compounding returns, but priced in
We consider Storskogen the ultimate compounding story, with an efficient M&A model geared for continued high activity. We calculate that reinvesting its strong cash generation and gearing up its balance sheet for acquisitions could nearly double our organic-only base-case scenario. However, we initiate coverage with a HOLD and SEK50 target price based on a peer group valuation. Our bull-case fair value is SEK82 and our bear-case fair value is SEK22, showing the challenge of valuing the stock.
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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