Volvo (Sell, TP: SEK152.00) - Limited growth beyond 2018e
Limited growth beyond 2018e We keep our SELL recommendation but have raised our target price to SEK152 (147) following better Q4 margins and strong order intake for Trucks and VCE. However, we fear that in 2018e we should be close to the peak of the truck cycle in North America and Europe and thus see no earnings growth in 2019e and 2020e. We also believe electric trucks will gradually change truck makers' business models, which is a risk, not only for Volvo. Therefore, we believe Volvo should be trading at a 30% discount to Nordic Capital Goods on P/E.
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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