Tomra (Sell, TP: NOK95.00) - Pricing does not reflect its growth
We expect Tomra to report a Q1 EBITA of NOK311m (results due at 7:00 CET on 26 April). We have reduced our 2024 EPS estimate by 3% on cuts in the Food segment while we have raised our 2026 by 6% from upwards revisions in the Recycling segment. We have raised our target price to NOK95 (75) while we reiterate our SELL as we struggle to justify its 2024e P/E of 33x (similar to that of the ‘Magnificent 7’ with ~20% annual growth rates) when seen in combination with Tomra’s 2024 revenues growth expected to near 3–4% and risk to 2025 and 2026 growth rates from potential delays in Poland and the UK’s DRS implementations.Tomra Systems is a creator of sensor-based solutions for optimal resource productivity within the business streams of reverse vending, material recovery, compaction, recycling, mining, and food. Co.'s operating structure comprises two business areas and six business streams. The TOMRA Collection Solutions businesss area consists of three business streams: reverse vending, material recovery, as well as compaction. The TOMRA Sorting Solutions, business area consists of three business streams: food, recycling, and mining.
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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