Epiroc (Hold, TP: SEK200.00) - Continued high activity

Ongoing high mineral prices have put the fundamentals in place for miners to maintain high opex. Longer-term, we like the secular growth from lower-ore grades, more underground mines, and electrification and digitalisation of equipment. However, in the short to medium term, we expect stable high-level order intake. In conjunction with the relative strong share price YTD, resulting in a rich relative valuation, we reiterate our HOLD and SEK200 target price.

Epiroc (Hold, TP: SEK200.00) - Order intake still strong

Q2 order intake was strong, up 45% organically YOY and 6% above consensus. High minerals prices continue to put the fundamentals in place for miners to maintain high opex. Long-term, we like the case of secular growth from lower-ore grades, an increasing number of underground mines, and electrification and digitalisation of equipment. However, in the short to medium term, we expect a more stable order intake. Combining this with the rich relative valuation and strong share price performance YTD,...

Epiroc (Hold, TP: SEK200.00) - Time for a breather

We like the long-term case in Epiroc with secular growth from lower ore grades, more and more underground mines, and electrification and digitalisation of equipment. However, we have downgraded the stock to HOLD with a SEK200 (210) target price. We expect near-term equipment order intake to weaken somewhat from the high Q1 levels. Additionally, increased political risk in Chile and Peru could lead to a lower likelihood for new projects. Lastly, the stock outperformed the OMXS30 by 8% YTD and by ...

Epiroc (Buy, TP: SEK210.00) - Building backlog

Epiroc’s Q1 order intake was strong, up 21% organically YOY and 6% above consensus. With high mineral prices putting the fundamentals in place for miners to maintain high opex, we expect Epiroc to enjoy among the strongest growth in the Capital Goods sector in 2021–2022. Also, the balance sheet is solid, and could be used for M&A. We reiterate our BUY and SEK210 target price.

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).

Epiroc (Buy, TP: SEK210.00) - Ramping up

We reiterate our BUY and have raised our target price to SEK210 (180). We see the equity story as compelling and based on three main pillars: 1) strong growth due to high mineral prices and rising demand for metals enabling the transition to electrification; 2) growth from increasing aftermarket and consumables penetration; and 3) structural growth from ever-deeper mines, lower ore grades, and the digitalisation and electrification of equipment. Hence, we expect Epiroc to see some of the stronge...

Epiroc (Buy, TP: SEK180.00) - Returns to EBIT growth

We reiterate our BUY and have raised our target price to SEK180 (160). Epiroc enjoyed solid execution in Q4 despite a significant FX headwind. Adj EBIT was up by 6% YOY, driven by efficiency and improving organic growth. We also expect a high rate of new product launches in 2021, especially within underground equipment, which could drive growth and market share. Current mineral prices put fundamentals in place for miners to lift their opex and capex.

Northern Lights

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...

Epiroc (Buy, TP: SEK160.00) - Solid as a rock

We reiterate our BUY and have raised our target price to SEK160 (150). With high mineral prices putting the fundamentals in place for miners to maintain high opex, we expect Epiroc to show among the strongest revenue growth in the Capital Goods sector over 2021–2022. We also see prospects for above-market growth in service from a higher share and, lastly, believe the solid balance could be used for M&A or extraordinary DPS.

Northern Lights

Epiroc (Buy, TP: SEK150.00) - Just out of the starting blocks

We reiterate our BUY and have raised our target price to SEK150 (140). After six quarters of negative organic order intake growth YOY (Service up ~10%, Equipment down 45%), it turned positive in Q3. With high mineral prices laying the groundwork for miners to maintain high opex, we expect Epiroc to show among the strongest growth in the sector in 2021–2022. The balance sheet is solid, which could be used for M&A, in our view.

Northern Lights

The new normal

Nordic Capital Goods (, ) - (69 pages)

Epiroc (Buy, TP: SEK140.00) - Well-placed for growth

We reiterate our BUY and SEK140 target price. With Equipment orders down 40% even before Covid-19 and high mineral prices putting the fundamentals in place for miners to maintain high opex, we expect Epiroc to be one of the first Nordic Capital Goods companies to return to pre-Covid-19 demand levels. Also, the balance sheet is solid, which could be used for M&A.

Northern Lights

Epiroc (Buy, TP: SEK140.00) - Mining equipment: the place to be

We reiterate our BUY and have raised our target price to SEK140 (130). With equipment orders down 40% even before Covid-19 and high mineral prices putting the fundamentals in place for miners to maintain high opex, we expect Epiroc to be one of the first Nordic Capital Goods companies to return to pre-Covid-19 demand levels. Also, the balance sheet is solid and we see acquisitions as potential share price triggers.

Epiroc (Buy, TP: SEK130.00) - Internal and external drivers

We reiterate our BUY, but have raised our target price to SEK130 (116). We believe investors will likely assign higher valuation multiples as we expect equipment orders to trough in Q2 and underlying demand still appears solid at spot metal prices. We like Epiroc’s best-in-class EBIT stability, leading position in a niche market set to outgrow underlying mining capex and opex long-term, and its strong balance sheet.

Epiroc (Buy, TP: SEK116.00) - Approaching trough earnings

We reiterate our BUY but have cut our target price to SEK116 (117). We expect trough earnings in Q2, to which we believe investors will assign higher valuation multiples as equipment orders are close to trough levels and underlying demand still appears solid at spot metal prices in our view. We have cut our 2020–2021e EBIT by 1–2% and we like Epiroc’s best-in-class EBIT stability, leading position in a niche market set to outgrow underlying mining capex and opex long-term, as well as its s...