Storskogen (Buy, TP: SEK11.70) - Establishing its future footprint

Storskogen has taken major steps to reestablish its investment credentials with its portfolio clean-up. Following the Q3 results, we have largely maintained our 2024–2026e EBITA but raised EPS by 3–6% on improved financials and lower financial costs. We see potential for the company to restart a more growth-oriented capital allocation focus in 2025, ending the deleveraging period. We reiterate our BUY on still-strong valuation support, and have raised our target price to SEK11.7 (11).

Storskogen (Buy, TP: SEK11.00) - Foundation for 2025 established

Storskogen has taken major steps to reestablish its investment credentials with investors in Q2, with the M Industrial Invest deal speeding up the clean-up of the portfolio. Thus, Q2 was also more of a financial tidying, with the underlying growth still looking solid. We see potential for Storskogen to restart a more growth-oriented capital allocation focus in 2025, ending the deleveraging period. We reiterate our BUY on still-strong valuation support (2025–2026e FCF yields of 17–18%), and have ...

Storskogen (Buy, TP: SEK9.25) - Another year of deleveraging focus

Q1 was weak, but above our expectations, prompting only limited forecast changes. The near-term focus remains on internal efficiency, returning to organic EBITA growth and deleveraging (end-Q1 net debt to EBITDA was still high at 3.31x all-in), suggesting a less-eventful 2024 from a corporate action perspective and renewed growth ambitions. We reiterate our BUY on still-strong valuation support (2024–2026e FCF yields of 17–22%), and have increased our target price to SEK9.25 (8.70).

Storskogen (Buy, TP: SEK8.70) - Another year of deleveraging focus

Q4 was weak with an 8.5% sales decline YOY and narrowing profit margins, while FCF generation remained a point of strength. The near-term outlook seems less supportive, translating into 11–7% cuts to our 2024–2025e EPS and with the focus remaining on deleveraging and internal efficiency. Thus, we see a less-eventful 2024 ahead, with our forecasts suggesting the gearing target of 2.0x RTM net debt to EBITDA should be reached by end-2024e. We continue to see value support (2024–2026e FCF yields of...

Storskogen (Buy, TP: SEK10.70) - Continued deleveraging focus

Q3 matched headline expectations but was weaker below, with higher non-cash items and financial costs. We have made only minor changes to our EBITA estimates after the results, but escalating financial costs and high gearing have translated into 3–8% cuts to our 2023–2025e EPS. With focus remaining on deleveraging and internal efficiency, we still expect a less eventful Q4 2023–H1 2024. We continue to see strong value support (2023–2025e FCF yields of 20–23%) and reiterate our BUY, but have lowe...

Storskogen (Buy, TP: SEK11.30) - Financials eating into forecasts

The Q2 report missed expectations. The results prompted only modest adjustments to our operating profit forecasts, but the high gearing and increasing financial costs have translated into 11–13% cuts to our 2023–2025e EPS. With focus remaining on deleveraging the balance sheet and internal efficiency, we still expect a less-eventful 2023. We continue to see strong value support (2023–2025e FCF yields of 16–19%) and reiterate our BUY, but have lowered our target price to SEK11.3 (14).

Northern Lights

Northern Lights

Storskogen (Buy, TP: SEK14.00) - Re-establishing its financial capacit...

Storskogen continued to re-establish its FCF generation credentials in Q1, easing investor concerns. Its focus remains on internal efficiency and deleveraging the balance sheet, so we still expect a less eventful 2023. Our forecasts are broadly unchanged. We continue to see strong value support (2023–2025e FCF yields of 12–14%) and reiterate our BUY but have lowered our target price to SEK14 (15), now applying a normal 20% discount to our SOTP valuation.

Storskogen (Buy, TP: SEK15.00) - FCF generation still weak

Q3 was mixed in our view, with FCF generation still weak. As the focus has shifted from acquisitions to internal efficiency and deleveraging the balance sheet, we expect a slower but more controlled progress. Our forecasts reflect this and are broadly unchanged post-Q3. We still see strong value support for the stock, with 2023–2024e FCF yields of 16–17%. Thus, we reiterate our BUY but have cut our target price to SEK15 (17.5).

Storskogen (Buy, TP: SEK17.50) - Resetting focus

Q2 earnings recovered QOQ, but FCF was weaker, and we believe the valuation reflects the internal shift in focus from high acquisition-based growth to efficiencies and restoration of FCF generation capacity. Our revised forecasts reflect this and higher financing costs, but we still see strong value support for the stock, with 2022–2024e FCF yields of 7.2–11.3%. We reiterate our BUY but have cut our target price to SEK17.50 (25).

Northern Lights

Storskogen (Buy, TP: SEK25.00) - Back to stronger value support

The Q1 results were mixed but, in our view, the share price reaction is more related to investor concerns that acquisition-based growth will soon either require new financing or slow if Storskogen relies only on its FCF. Our revised forecasts reflect the latter scenario, and we believe the shares have strong value support, with a FCF yield of 6.6–10.7% for 2022–2024e. We reiterate our BUY but have cut our target price to SEK25 (34).

Storskogen (Buy, TP: SEK34.00) - Up to BUY on weak share price

Q4 was mixed but the weak share price seems more related to a new investor focus, as the impressive acquisition-based growth soon will either require further new equity or be trimmed if the company is relying only on its own FCF. With our adjusted forecast reflecting the latter scenario, the shares have strong value support, with a FCF yield of 5.7–6.5% for 2022–2024e. We have upgraded to BUY (HOLD) with a SEK34 (42) target price.

Storskogen (Hold, TP: SEK42.00) - Impressive execution to date

Our Q4 Storskogen forecasts are broadly in line with consensus. Consolidating the acquisitions since the Q3 update (21 in total) implies a 17–20% lift to earnings for 2022–2024e, illustrating the dynamic in Storskogen’s compounding model. However, with peer multiples deflating, we have cut our target price to SEK42 (50) and have narrowed the spread between our bull and bear cases, leading us to reiterate our HOLD.

Storskogen (Hold, TP: SEK50.00) - Financial muscle for acquisitions

Storskogen’s Q3 was somewhat weak, seemingly related to timing effects. We have tweaked our forecasts following the report. Supported by the recent new equity capital issue, we view Storskogen’s compounding story and efficient M&A model, supported by a strong balance sheet, as setting up an active acquisition period. We have widened the spread between our bull and bear cases based on relative valuation moves, but reiterate our HOLD and SEK50 target price.

Storskogen - Initiation of coverage - Compounding returns, but priced ...

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.