Husqvarna (Sell, TP: SEK63.00) - Tough Q1 expected

We forecast weak consumer demand, lower volumes, negative mix, high robotics comparables, and a partial exit from its combustion engine business (worth cSEK750m of sales) to weigh on sales and EBIT in Q1, with market dynamics and a consumer environment similar to H2 2023. We forecast a Q1 sales decline of 9% YOY and an adj. EBIT margin of 11.4%, down 260bp YOY. We reiterate our SELL and SEK63 target price.

Husqvarna (Sell, TP: SEK63.00) - Under pressure

We reiterate our SELL and have lowered our target price to SEK63 (65), as we cannot extrapolate Q4’s strong growth in professional robotics into 2024, weak consumer demand and macroeconomic headwinds should weigh on sales and earnings in H1, and longer-term we remain cautious on the impact of the transition to electrification on margins.

Husqvarna Minor model adjustments

We have updated our estimates, owing to updated FX, minor adjustments to our adj. EBIT assumptions and one-offs in Q4 2023 (results due at c07:00 CET on 2 February). We do not consider these changes to be material, and we have not changed our SELL recommendation. We reiterate our SEK65 target price.

Husqvarna (Sell, TP: SEK65.00) - Weak Q4e

We expect weak demand to weigh on sales and EBIT in Q4, with similar market dynamics as in Q3 and consumers still under pressure. We forecast Q4 sales growth of -17% YOY on organic growth of -16% YOY due to lower volumes, and negative mix effects. These factors should also weigh on profitability; we estimate a Q4 adj. EBIT margin of -4%. We reiterate our SELL but have raised our target price to SEK65 (60) on a marginally more positive outlook.

Husqvarna (Sell, TP: SEK60.00) - Facing challenging times

We have downgraded Husqvarna to SELL (HOLD) and cut our target price to SEK60 (85). We expect negative organic growth and see a poor earnings outlook for 2024 following the Q3 results on: 1) weak consumer demand; 2) our forecast of lower robotic lawnmower sales; 3) low profitability on battery products; 4) headwinds from exiting part of its combustion engine business; and 5) our view of de-stocking continuing.

Husqvarna (Hold, TP: SEK85.00) - Uncertainty remains for now

We reiterate our HOLD, but have lowered our target price to SEK85 (100) following a change of analyst. We expect challenging market conditions, elevated earnings risk, and poor visibility to continue into 2024. However, by leveraging on structural trends and boosting exposure to its growth areas, along with cost savings, we believe the company should realise solid sales and profitability improvements through our forecast period.

Husqvarna (Hold, TP: SEK100.00) - Muddling through

The signs are that 2023 will be a mid-cycle year for Husqvarna, with pressure on volumes to date offset by an improved mix and lower costs. Near-term, in our opinion earnings risk remains high, and visibility into 2024 limited. However, we believe structural growth trends and cost savings should enable solid earnings growth throughout our forecast period; hence, we reiterate our HOLD, but have raised our target price to SEK100 (94).

Northern Lights

Husqvarna (Hold, TP: SEK94.00) - Focus on what’s beyond 2023

We have upgraded Husqvarna to HOLD (SELL) and raised our target price to SEK94 (85) ahead of the Q2 report (due on 18 July). Although we see weather-related earnings risk in Q2, we believe it is time to look beyond the weakness in 2023e. For 2024–2025, we expect a return of organic growth and improved profitability, driven by mix and cost savings.

Husqvarna (Sell, TP: SEK85.00) - Time for the real test now

We reiterate our SELL but have raised our target price to SEK85 (82) following the Q1 report. We have increased our 2024e adj. EBIT by 4% on higher EBIT margin expectations for Construction. While Q1 was a sell-in quarter, boosted by re-stocking of robotic lawnmowers, we believe the real test is Q2. We keep our negative view, as we expect weaker consumer spending to have a significant impact on sales and EBIT for the remainder of the year.

Still going strong

Although reported EU taxonomy alignment for the sector is low, we have identified which companies screen best and could benefit from attracting ESG capital. We still favour China, mining, energy and aftermarket exposure, and see upside potential to consensus estimates, but view overall risk/reward as neutral on elevated valuation.

Northern Lights

Husqvarna (Sell, TP: SEK82.00) - Everything everywhere all at once

We have downgraded Husqvarna to SELL (HOLD) and have cut our target price to SEK82 (86). We see a poor earnings outlook after Q1 as 1) we expect soft demand for robotic lawnmowers, which is a truly discretionary product; 2) the consumer weakness that has hit many other companies should be more evident for Husqvarna in the coming quarters; and 3) all-time high inventories will need to be reduced, which should lead to fixed-cost under-absorption.

Northern Lights

Husqvarna (Hold, TP: SEK86.00) - Bumpy ride

We believe Husqvarna’s H1 2023 should be clearly weaker than consensus; our 2023e EBIT is 11% below Infront consensus. Nevertheless, we reiterate our HOLD and have raised our target price to SEK86 (65) as we are not only more optimistic about Q4 2022e, but also believe the company should generate strong profitability and growth in 2024e, driven by structural growth and solid internal execution.

Industrial blues

DNB Markets’ Strategy and Macro team suggests being underweight industrials, due to the sector’s premium valuation and risk of >10% earnings cuts in 2023 from a cyclical slowdown. Our sensitivity analysis shows Volvo, Dometic and Autoliv have the greatest downside risk to earnings in a cyclical slowdown, while Assa Abloy and Hexagon (two of our sector top picks) should be most resilient. We prefer mining, energy, aftermarket and China exposure.

Husqvarna - Recovery of the robotics

Cost savings to offset strategic acceleration Robotics back to strong growth after tough H1’22 We leave our ‘24e EBIT unchanged, ‘23e EBIT -5%

Husqvarna - Mixed Q3 numbers, SEK 800m savings ahead

Sales well above expectations Softer earnings, mainly due to weak margin in Gardena ‘23e ests. could come down on weak Gardena margin

Husqvarna - Cutting underlying estimates

We expect robotic sales to bounce in 2023 Q3’22 preview: burdened by component shortages We cut underlying estimates and TP to SEK 80 (100)

Northern Lights