reports
- Joachim Gunell
Storytel (Buy, TP: SEK75.00) - The plot thickens
We believe recent insider trading and EQT’s board representative not standing for re-election could signal a potential shift in the shareholder base and direction for Storytel, which could create some short-term uncertainty, but also trigger a strategic review. We reiterate our BUY and SEK75 target price as we see potential upside to Storytel’s 2024 EBITDA margin guidance with a step change in FCF generation driving an undemanding valuation, with a 2025e EV/EBITDA of 7x, P/E of 19x and OpFCF yie...
- Joachim Gunell
Nokia (Hold, TP: EUR3.30) - H2e execution story
Despite an 18% underlying adj. EBIT miss, a Q1 highlight was gross-margin resilience, which in our view indicates medium-term earnings potential. For the stock to re-rate, however, we believe focus needs to move from an SOTP discussion to: 1) earnings momentum, as Nokia executes on its H2-tilted outlook; 2) balance-sheet optionality allowing larger buybacks; and/or 3) the possibility of a break-up. With our 2024–2025e broadly unchanged, we are not willing to take such a stance yet, and still see...
- Joachim Gunell
Ericsson (Buy, TP: SEK70.00) -
Despite a delay in our mix-driven earnings and FCF rebound case, Ericsson’s Q1 gross margin showed early signs of trends we believe should accelerate through 2024 and ultimately drive Infront consensus EPS revisions closer to our full-year adj. EBITA (17% above consensus), potentially triggering a re-rating. In our view, Ericsson’s soft market outlook commentary and implicit Q2 guidance should be seen in light of its ongoing union negotiations in Sweden amid lay-offs. We reiterate our BUY and SE...
- Joachim Gunell
HMS Networks (Buy, TP: SEK540.00) - Red(y) to roar
We have upgraded HMS Networks to BUY (SELL) and raised our target price to SEK540 (450) as: 1) we have increased our 2024–2025e adj. EPS by 5–15% and like Red Lion’s strategic fit; 2) we see investor focus shifting to improving QOQ orders; 3) restructuring programmes have historically marked an end-market trough; 4) 2025e multiples are digestible, and we see a good entry point; and 5) we expect the stock to close the gap to the PHLX semiconductor index.
- Joachim Gunell
Hexagon (Buy, TP: SEK140.00) - FCF set to catalyse re-rating
We are 3% below Infront consensus Q1e EBIT and will focus on 1) organic growth deceleration, and 2) continued FCF improvements (we are 6% above Visible Alpha consensus). For 2024, we see Hexagon outperform as it demonstrates its hallmarks despite cyclical headwinds: 1) defensive 6% organic growth YOY; 2) richer gross margin and benefits of cost savings to drive margin expansion for ~9% YOY EPS growth, with potential upside from M&A; and 3) improved cash conversion to set up 29% YOY FCF growth. W...
- Joachim Gunell
HMS Networks (Sell, TP: SEK450.00) - Challenging quarter ahead
Ahead of the Q1 results (due at 07:30 CET on 16 April), we have reduced our 2024–2025e EBIT by 3–2% on the sluggish market recovery, echoed by automation peers and leading indicators. We await more disclosure next week before including the Red Lion acquisition in our model (consolidated as of April; does not affect Q1 results). We reiterate our SELL and SEK450 target price, as we are 6% below Visible Alpha consensus on Q1e EBIT. While we believe investors are likely willing to look beyond a few ...
- Joachim Gunell
Nokia (Hold, TP: EUR3.60) - Nokia Technologies saves Q1e
Nokia is not a top-line case but we expect it to show strong resilience on non-IFRS EBIT in Q1 (we are 5% above post-Q4 Infront consensus), supported by Nokia Technologies catch-up payments amid still-weak end-markets. The stock remains in value territory, as we find its patent portfolio could represent ~80% of its EV, valuing the stub at a 2024e EV/EBIT of 3.2x. That said, we reiterate our HOLD with a new EUR3.6 (3.7) target price on our view of a lack of catalysts to drive a re-rating other th...
- Joachim Gunell
Ericsson (Buy, TP: SEK70.00) - Rebound case pushed back
The steep slowdown in India deployments, postponed recovery in the US profit centre, another round of layoffs, and a new CFO leaves our Q1e adjusted EBITA 13% below post-Q4 Infront consensus and raises the risk of another reduction in consensus EPS. We reiterate our BUY but have cut our target price to SEK70 (76), having lowered our 2024–2025e EPS by 7–5% as we still see an attractive risk/reward story for H2e, with the share price reflecting much negative news (close to five-year lows) on posit...
- Joachim Gunell
Fortnox (Buy, TP: SEK85.00) - Guess who’s back
We view Fortnox as the best on the block with consensus underestimating its medium-term earnings power, and have upgraded to BUY (HOLD) on the share price weakness. The stock has dropped 12% since the strong Q4 report that counteracted most of the negative angles raised in a recent Financial Times article. We expect Fortnox to at least meet Bloomberg consensus in Q1 and see potential triggers for H2, with easier comparables, potential macro tailwinds, and traction in the Fortnox Card launch. We ...
- Joachim Gunell
Byggfakta Group (Hold, TP: SEK52.00) - Bid raised to SEK52/share
Last night, Giant BidCo raised its take-private offer – to SEK52/share (up 13% from the initial SEK46/share) – in line with our expectation. We have downgraded to HOLD (BUY) and cut our target price to SEK52 (57), as we see a low likelihood of a further raised bid given: 1) the support for the new bid from remaining institutional IPO investors; 2) other potential suitors likely would have already shown interest; and 3) it represents a compromise between Giant BidCo and the institutions that seem...
- Joachim Gunell
Yubico - Initiation of coverage - One key to unlock them all
Just as Swedish industrial giants Ericsson (GSM) and Volvo (three-point safety belt) have defined open industry standards in the past, so today is Yubico, a technology pioneer and modern authentication leader spearheading secure login standards. Cybersecurity is a critical issue in 2024 and looks set to remain so for the rest of the decade, suggesting sustained and robust sales growth on underappreciated scalability. We believe this should allow the company to compress its current high multiples...
- Joachim Gunell
Storytel (Buy, TP: SEK75.00) - Unveiling the next chapter
The share price is up 130%+ since its October-lows, and we believe we have reached an inflection point. The SEK672m writedown of Audiobooks.com and less focus on its 15 expansion markets marked the end of the turnaround, in our view. In its next chapter, management is building credentials of overperformance and the 2024 guidance looks to be in reach. We believe Storytel offers investors sustainable double-digit organic sales growth, attractive profitability, strong FCF ramp-up and an undemanding...
- Joachim Gunell
Fortnox (Hold, TP: SEK75.00) - Best on the block, but range-bound
The strong Q4 demonstrated Fortnox’s hallmark scalability, with 100–155% EPS and FCF growth YOY and a 10% EBIT beat versus consensus, wrapping up the short case. We believe its underestimated medium-term earnings power offers potential for a~20% IRR, but that most of the positives for 2024e (price rises and growth from new products) are already priced in, and it still faces tough YOY comparables for H1. We have edged up our target price to SEK75 (74), but given the lack of short-term potential u...
- Joachim Gunell
Byggfakta Group (Buy, TP: SEK57.00) - We still expect a raised bid
The Q4 results showed no signs of maximising the short-term financial profile, given EBITDA margin headwinds and another acquisition. We reiterate our BUY and have raised our target price to SEK57 (55) as we see potential for a raised take-private bid as: 1) SEK46/share bid, with backing from 68.6% of the shares, is still a ~25% discount to our DCF and peers’ multiples valuations; 2) media reports on investor concerns regarding the bid price and potentially amassing 10%+ of shares needed to bloc...
- Joachim Gunell
Hexagon (Buy, TP: SEK140.00) - Short story closed
The FCF improvements in Q4 mean we can put the main short report criticism behind us. Looking to 2024, we expect Hexagon to show its hallmarks despite cyclical headwinds: 1) defensive 6% organic growth YOY; 2) a richer gross margin and the benefits of cost savings driving margin expansion, leading to ~9% YOY EPS growth with upside potential from M&A; and 3) improved cash conversion to set up FCF growth of 28% YOY. We reiterate our BUY and have raised our target price to SEK140 (135).
- Joachim Gunell
HMS Networks (Sell, TP: SEK450.00) - Transitional quarters ahead
We see a puzzling disconnect between our 25% YOY EPS drop for 2024e (including Red Lion) and HMS Networks’ lofty 36–24x pro forma 2024–2025e EV/EBIT. Order backlog signals a likely weak H1e, and we have cut our 2024–2025e EPS by 11–3% and are 17–7% below Visible Alpha consensus on 2024–2025e EBIT. HMS Networks is arguably a high-quality business, the Red Lion acquisition should create meaningful shareholder value medium-term, and an end-market trough is probably close, but we believe the stock i...
- Joachim Gunell
Nokia (Hold, TP: EUR3.70) - Signals of EPS revision trough
Nokia is not a top-line case, and the execution below the top line was impressive, as it beat Infront consensus’ adj. EBIT by 11% despite a 7% net sales miss. Its H2-tilted guidance suggests Infront consensus EPS should hold and a trough in the EPS reduction trend could support the valuation. We have increased our 2024–2025e EPS by 1–5% due to margin resilience and its EUR600m share buyback programme. We have raised our target price to EUR3.7 (3.3) and reiterate our HOLD on a lack of triggers ot...
- Joachim Gunell
Ericsson (Buy, TP: SEK76.00) - Not a top-line case
In the Q4 results, the positives were: 1) a resilient gross margin and cost control in light of weak sales; 2) the CS&S turnaround fueling the 6% adj. EBITA beat; and 3) strong FCF. These more than offset: 1) soft guidance; 2) low visibility of a market recovery; and 3) a slower AT&T ramp. We have cut our 2024e non-IFRS EPS by 6% but note that the shares closed +4% on the day, signalling investors starting to find a foothold on the earnings and FCF rebound potential for 2024. We reiterate our BU...
- Joachim Gunell
Byggfakta Group (Buy, TP: SEK55.00) - Pump it up
Having digested Giant BidCo’s SEK46/share offer of 5 January to take Byggfakta Group private, we see a reasonable scenario for a raised bid as: 1) SEK46/share represents a ~20% discount to our DCF and peer multiples; 2) backers in the 2021 IPO have voiced concern in the media, and we believe could amass the 10%+ of shares needed to block the bid; and 3) we would not rule out other potential suitors. We reiterate our BUY and have raised our target price to SEK55 (48), applying a fair value-based ...
- Joachim Gunell
Fortnox (Buy, TP: SEK74.00) - Defensive high growth in 2024e
Short interest has increased to 7.2% of the free float and the main dispute between bulls and bears is if Fortnox can reach 2024 consensus. We believe its products and growth opportunities are more significant than bears appreciate, yet the execution to realise this might prove more difficult than bulls understand. The bar is now more modest, and we see Fortnox as a top sector pick based on its defensive high-growth exposure. We reiterate our BUY and SEK74 target price.
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