Atlas Copco (Hold, TP: SEK600.00) - Ramping up, but not enough

We expect the strong order intake growth to continue and forecast a sequential increase in Q3 (4% above consensus). However, our adj. EBIT is below consensus due to lower sales. Fundamentals still appear favourable given 1) an improved outlook for Vacuum Technique; and 2) Compressor Technique gaining market share. Nevertheless, we consider the valuation rich relative to historical averages and reiterate our HOLD and SEK600 target price.

Atlas Copco (Hold, TP: SEK550.00) - Yet another order beat

Order intake in Q2 of SEK32.5bn was impressive, 11% above consensus and 28% above the average since Q1 2018. Fundamentals for 2021e look favourable, driven by: 1) a reversal of the weakness in operating leverage; 2) an improved outlook for Vacuum Technique; and 3) Compressor Technique gaining market share. However, we consider the valuation rich relative to historical averages and reiterate our HOLD and SEK550 target price.

Atlas Copco (Hold, TP: SEK550.00) - Book-to-bill still above 1x

Atlas Copco (ATCOA SS, Hold) - Book-to-bill still above 1x (19 pages)

Atlas Copco (Hold, TP: SEK550.00) - Solid execution

Fundamentals for 2021 seem favourable for Atlas Copco, driven by: 1) a reversal of the weakness in operating leverage; 2) an improved outlook for Vacuum Technique; and 3) Compressor Technique returning to growth. However, we still consider the valuation rich relative to historical averages and peers, and thus reiterate our HOLD. Nevertheless, we have raised our target price to SEK550 (525) on higher estimates.

Go West…

Sector profitability is set to be strong in 2021 but mounting supply chain constraints are an increasing concern. We favour US exposure (Assa Abloy, Hexpol, Dometic), mining equipment (Epiroc, Metso Outotec) and construction. We recently upgraded Alfa Laval and Hexpol (from HOLD to BUY) and downgraded Volvo and ABB (from BUY to HOLD).

Atlas Copco (Hold, TP: SEK525.00) - Benefiting from chip shortage

We still consider the valuation rich relative to historical averages and peers, but from a fundamental perspective we believe 2021 will be a good year for Atlas Copco, due to: 1) a reversal of the weakness in operating leverage; 2) an improved outlook for Vacuum Technique; and 3) Compressor Technique returning to growth. We reiterate our HOLD but have raised our target price to SEK525 (460).

Northern Lights

Atlas Copco (Hold, TP: SEK460.00) - Fundamentals improving

We still consider the valuation rich relative to historical averages and peers, but now take a more positive view on fundamentals in 2021 based on: 1) a reversal of the weakness in operating leverage; 2) an improved outlook for Vacuum Technique; and 3) Compressor Technique returning to growth. As a result, we have upgraded Atlas Copco to HOLD (SELL) and raised our target price to SEK460 (360).

Northern Lights

Green is good

Average alignment with the EU Taxonomy that defines ‘sustainable activities’ could be as low as 11% for the sector. Hexagon, ABB and Alfa Laval screen best, while ‘strong’ ESG cases like Nibe and Beijer Ref’s alignments are surprisingly low. We also see a mismatch between companies’ taxonomy alignment and ESG funds’ positioning, which could have a major impact on flows in certain stocks. For 2021, our top sector picks are Autoliv, Dometic, Epiroc, Metso Outotec, Hexagon and SKF, as we favour aut...

Atlas Copco (Sell, TP: SEK360.00) - Fully valued

Long-term, we believe Atlas Copco is well placed for good growth in a low-growth environment. However, medium-term, we see a risk of weak order intake and earnings relative to consensus; we are 7% below consensus on 2021e order intake and 6% below on adj. EBIT. Given its high relative and absolute valuations, we reiterate our SELL, but have raised our multiples-based target price to SEK360 (340).

Northern Lights

Atlas Copco (Sell, TP: SEK340.00) - Strong performance from CT

Long-term, we believe Atlas Copco is well placed for good growth in a low-growth environment. However, medium-term, we see a risk of weaker order intake than consensus, due to lower global demand and tough comparables. EBIT growth excluding the impact of a weak SEK and M&A in 2019 was limited, despite decent organic growth. Given high relative and absolute valuations, we reiterate our SELL and SEK340 target price.

Northern Lights

The new normal

Nordic Capital Goods (, ) - (69 pages)

Atlas Copco (Sell, TP: SEK340.00) - Fully priced

Long-term, we believe Atlas Copco is well-placed for good growth in a low-growth environment. However, medium-term, we see a risk of weak order intake from lower global demand and tough comparables for large gas and process compressors in Compressor Technique (CT). EBIT growth excluding the impact of a weak SEK and M&A in 2019 was limited despite decent organic growth. Given high relative and absolute valuations, we reiterate our SELL but have raised our target price to SEK340 (310).

Atlas Copco (Sell, TP: SEK310.00) - H2 recovery expectations overdone

Long-term, we believe Atlas Copco is well placed for good growth in a low-growth environment. However, medium-term, we see a risk of weak order intake from lower global demand and tough comparables for large gas and process compressors in Compressor Technique (CT). In addition, in 2019, excluding FX tailwind, EBIT growth has been muted, despite decent organic growth. Given high relative and absolute valuations, we reiterate our SELL and SEK310 target price.

Northern Lights

Northern Lights

Atlas Copco (Sell, TP: SEK310.00) - Above on orders, below on EBIT

Long-term, Atlas Copco is well placed to generate good growth in a low-growth environment. However, medium-term, we see a risk of weak order intake from lower global demand and tough comparables for large gas and process compressors in CT. In addition, we note that, excluding FX tailwind, EBIT growth has been muted recently, despite decent organic growth. Given the high relative and absolute valuation, we reiterate our SELL, but have raised our target price to SEK310 (290) as we shift the valuat...