Kesko (Hold, TP: EUR18.00) - Remaining on the sidelines

While we believe Kesko has continued to show good resilience in a challenging cycle, we are c3.5% below consensus on Q1e clean EBIT. Our focus in the report will be on divisional operating margins and any outlook commentary. We remain muted on the stock due to the uncertainty in the Nordic construction sector, coupled with a sluggish consumer outlook. We reiterate our HOLD, but have cut our target price to EUR18 (19).

Kesko (Hold, TP: EUR19.00) - Grocery gains

The Q4 results included a c4% clean EBIT beat, primarily on Grocery Trade strength (flat margins YOY). The muted outlook and 2024 guidance were as expected, limiting the excitement in our view. We reiterate our HOLD on limited estimate changes, but have raised our target price to EUR19 (18).

Kesko (Hold, TP: EUR18.00) - Focus on 2024 outlook

We believe focus in the Q4 report will be on 2024 market outlook comments and group guidance (we expect lower earnings YOY and prolonged market weakness). Our 2024–2025 earnings estimates are slightly above consensus (which has likely yet to reflect recent M&A). We reiterate our HOLD, but have raised our target price to EUR18.0 (16.5).

Kesko (Hold, TP: EUR16.50) - HOLDing up Kesko’s Q3 results were resili...

Kesko (KESKOB FH, Hold) - HOLDing up Kesko’s Q3 results were resilient overall, despite Grocery Trade’s (GT) profitability missing our expectation. We reiterate our HOLD but have reduced our target price to EUR16.5 (17), after trimming our 2024–2025e clean EPS by c2% on average. (17 pages)

Kesko (Hold, TP: EUR17.00) - Trading momentum fading

While profits and execution should have held up in Q3, we now expect earnings to be under pressure for longer on prolonged market weakness. We have downgraded to HOLD (BUY) and cut our target price to EUR17 (23), having lowered our 2024–2025e clean EBIT by c5.5%. In the report (due at 07:00 CET on 26 October), we will focus on segments’ profitability and the outlook.

Northern Lights

Kesko (Buy, TP: EUR23.00) - Resilient Q2

We have trimmed our 2023–2025e clean EPS on a softer Building and Technical Trade (BT) outlook and sluggish Car Trade (CT) new orders, but expect these to be largely offset by a resilient Grocery Trade (GT). Kesko’s underlying execution seems strong in a harsh market and the shares penalised by temporary market headwinds. We reiterate our BUY and EUR23 target price.

Northern Lights

Kesko (Buy, TP: EUR23.00) - More challenging 2023 outlook

We reiterate our BUY, but have cut our target price to EUR23 (25) after reducing our clean EBIT by 3% for 2023e, and c2% for 2024–2025e, driven by weaker Building and Technical Trade (BT) sales. However, our positive long-term view is intact.

Kesko (Buy, TP: EUR25.00) - Tougher market, but company in good shape

Q1 earnings were in line with consensus but the report was mixed. The guidance and market outlook were maintained, but the positive surprise in Grocery Trade (GT) was offset by a miss in Building and Technical Trade (BT). We consider GT structurally more important for Kesko and find the share price drop on the day of the results an overreaction. We have made minor estimate revisions and reiterate our BUY and EUR25 target price.

Northern Lights

Kesko (Buy, TP: EUR25.00) - Minor model adjustments

We have updated our estimates to reflect the company’s pre-announced sales figures for Q1 (full results due at 07:00 CET on 28 April), slightly raising our sales forecasts for Grocery Trade and Car Trade, but lowering our expectations slightly for Building and Technical Trade. Our earnings estimates are broadly unchanged. Hence, we do not consider these changes to be material, and we have not changed our BUY recommendation. We reiterate our EUR25 target price.

Northern Lights

Kesko (Buy, TP: EUR25.00) - Position of strength

Solid momentum in B2B and potential M&A look set to be EBIT drivers for 2023 and beyond. While the consumer outlook remains challenging, we believe sentiment could be troughing, with improvements around the corner. We also see room for positive surprises, given Kesko’s strong financial position. We reiterate our BUY and EUR25 target price.

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Kesko (Buy, TP: EUR25.00) - B2C soft, but B2B excels

The Grocery Trade’s (GT) B2C-driven Q4 miss has prompted us to cut our 2023–2024e clean EPS by c2% on average. The quality B2B elements (Onninen, Kespro) are heading in the right direction and supporting margins in tough markets, and we expect GT’s weakness to be temporary and thus for it to be largely stable. We reiterate our BUY and EUR25 target price.

Northern Lights

Kesko - Initiation of coverage - Defensive and offensive

Nordic-focused retail conglomerate Kesko has a long track record of profitable growth and stable cash flow generation. We see an attractive entry point on our view of good prospects for the company remaining a consolidator in Northern Europe’s building and technical (professional) trade sector, as well as the valuation having been punished by the bleak short-term outlook for construction. We initiate coverage with a BUY and EUR25 target price.

Kesko - Another beat, another guidance upgrade

Impressive 8.5% EBIT margin in Grocery trade Guidance raised to EUR 790-840m (750-840m) Good value at ‘23e lease adj. EV/EBIT of 12.4x: BUY

Kesko - A strong set of Q3 results

Adj. EBIT 5% ahead of expectations Strong margin in Grocery trade We expect consensus ‘22e EBIT to come up ~2%