Alfa Laval (Buy, TP: SEK495.00) - Alfa Lavalicious

We are 4% above consensus on Q1e orders but roughly in line on sales and adj. EBITA, and expect the company to guide for unchanged demand in Q2 versus Q1. We reiterate our BUY and have raised our target price to SEK495 (430) after raising our 2024–2026e adj. EBITA by 5% on average. We are 4–10% above consensus on 2024–2026e adj. EBITA and continue to view Alfa Laval as one of the sector’s most exciting long-term growth stories, driven by the energy transitions.

Alfa Laval AB: 1 director

A director at Alfa Laval AB bought 750 shares at 392.500SEK and the significance rating of the trade was 53/100. Is that information sufficient for you to make an investment decision? This report gives details of those trades and adds context and analysis to them such that you can judge whether these trading decisions are ones worth following. Included in the report is a detailed share price chart which plots discretionary trades by all the company's directors over the last two years clearly s...

Alfa Laval (Buy, TP: SEK430.00) - Better than it looked – still good

We believe investors found Q4 worse than it was due to poorly disclosed one-off costs in Energy and Food & Water. With the strong improvement in the Marine EBITA margin YOY and potential for further improvement in 2024, as well as robust commentary on underlying demand for Q1 and 2024 (barring heat pumps and Desmet), we continue to find the outlook for 2024 attractive (we expect adj. EBIT up >20% YOY, flat for the sector). We reiterate our BUY but have trimmed our target price to SEK430 (435).

Alfa Laval (Buy, TP: SEK435.00) - Solid Q4e in the making

We are in line with consensus on Q4e orders but 4–6% below on sales and adj. EBITA following our reduced FX forecasts. We believe underlying trends in Q4 will have been robust compared to Q3 and focus should be mainly on order intake and continued margin improvements in Marine. We have cut our 2024–2025e adj. EBITA by 4–5% on FX, but reiterate our BUY and SEK435 target price. At >20% adj. EPS growth in 2024e, Alfa Laval still screens as one of the best names in the sector and remains a sector to...

Decoding Alpha

Our analysis of underlying total shareholder return (TSR) drivers for Swedish Industrial companies reveals that high returns are not synonymous with high valuations. Investors tend to overpay for ‘growth’, while cash returns such as dividends and buybacks are typically deeply discounted. We believe Autoliv, Alfa Laval and Hexagon offer the most long-term TSR potential (13–14% annualised), with SKF and Trelleborg at the other end of the spectrum (8–9%), while also concluding that several stocks l...

Alfa Laval (Buy, TP: SEK435.00) - Margins improving

We reiterate our BUY but have trimmed our target price to SEK435 (445) and believe the Q3 report supported our case on the upside potential for Energy and Marine margins. However, management’s comment about a slower ramp-up of new capacity in Energy to match demand was a small negative, in our view. We have raised our 2023–2025e adj. EBITA by 2% on average.

Alfa Laval (Buy, TP: SEK445.00) - Marine margins set to recover

We are 1–2% above consensus on Q3e orders, sales and adj. EBITA and believe focus should mainly be on order intake and potential improvement in Marine margins. We have raised our 2024–2025e adj. EBITA by c2% (driven by positive FX effects and higher assumptions for capacity expansion in Energy) and are now c10% above consensus for both years. We like the story and find the valuation attractive at a 2024e EV/EBIT of 13.5x. We reiterate our BUY and have raised our target price to SEK445 (440).

Northern Lights

Alfa Laval (Buy, TP: SEK440.00) - From cyclical to structural growth

Alfa Laval’s Q2 results supported our case that its growth profile is gradually shifting from cyclical to structural, with demand driven by the energy transition, offsetting cyclical weakness. The results also provided further evidence that consensus continues to underestimate the potential structural margin uplift in Energy and Marine’s demand outlook. We have made small changes to our estimates (2023e adj. EBITA down 2%, but 2024–2025e up 1–2%). We reiterate our BUY and have raised our target ...

Alfa Laval (Buy, TP: SEK435.00) - The Alfa that gives you Alpha

We have upgraded Alfa Laval to BUY (HOLD), as we believe the past week’s share-price softness offers a good entry point into a key enabler of the energy transition and one of the most promising long-term stories in the sector. We have raised our 2024–2025e adj. EBITA by c4% and are now 7–9% above consensus, which underestimates the potential structural margin uplift in Energy as well as Marine’s demand outlook and margin recovery, in our view. We have raised our target price to SEK435 (415).

Alfa Laval (Hold, TP: SEK415.00) - Strong order intake

Although Alfa Laval’s Q1 adj. EBITA was in line with our forecast if removing the one-off inventory revaluation, we have raised our 2023–2025e adj. EBITA by 5–10% owing to exceptionally strong order intake, which has boosted our sales estimates. We have also increased our underlying margin assumptions. We reiterate our HOLD but have raised our target price to SEK415 (375).

Northern Lights

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.

Alfa Laval (Hold, TP: SEK375.00) - Set for a strong Q1e

We are 8% above consensus adj. EBITA for Q1e. We have trimmed our estimates but remain 2–4% above consensus on 2023–2025e adj. EBITA. We still see appeal in Alfa Laval’s long-term growth story but find the risk/reward to be neutral at a 2023e EV/EBIT of c16.4x. We reiterate our HOLD and have raised our target price to SEK375 (370).

Northern Lights

Northern Lights

Alfa Laval (Hold, TP: SEK370.00) - Can’t keep up with the share price

While we continue to like Alfa Laval’s long-term growth story, we have downgraded to HOLD (BUY), as we see the stock as fairly valued at a 2023e EV/EBIT of c17x following a strong share price performance either side of the Q4 report. However, we have raised our 2023e adj. EBITA by 4% on higher organic growth assumptions and raised our target price to SEK370 (345).

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.

Northern Lights

Alfa Laval (Buy, TP: SEK345.00) - Confident in Marine recovery

With better visibility on the moving parts behind the recent weakness in the Marine division’s margin and strengthened confidence in its recovery potential, we have raised our estimates slightly and are now 5% above consensus on 2023e adj. EBIT (17% above for Marine). We reiterate our BUY and have raised our target price to SEK345 (295), and still view Alfa Laval as a sector top pick for 2023, forecasting 21% YOY adj. EBIT growth (versus sector median of flat YOY).