reports
- Ebba Bjorklid
Sweco (Buy, TP: SEK221.00) - Billing ratio continues to improve
The billing ratio continued to rise in Q4 to a strong 74.6% (Q4 2023 73.3%). Supported by large-scale efficiency measures, we expect the billing ratio and EBITA margin to continue improving. We reiterate our BUY and have increased our target price to SEK221 (216).
- Ebba Bjorklid
Sweco (Buy, TP: SEK216.00) - Billing ratio looks set to improve
For Q4, we forecast solid demand across most regions, offsetting weakness in real estate, industrial services, and transport infrastructure in the UK. We expect the continuation of a higher billing ratio to be a key driver for our estimated 200bp higher EBITA margin in Q4 YOY. We reiterate our BUY and SEK216 target price.
- Ebba Bjorklid
Sweco (Buy, TP: SEK216.00) - Structurally higher billing ratio
Following the Q3 results, we have more confidence in the speed and magnitude at which Sweco should be able to achieve a structurally higher billing ratio and EBITA margin supported by its large-scale efficiency improvements. Consequently, we reiterate our BUY and have increased our target price to SEK216 (194).
- Ebba Bjorklid
Sweco (Buy, TP: SEK194.00) - Step in the right direction
We now expect a market recovery in segments under pressure in 2025 (previously H2 2024). For Q3, we forecast solid demand across most regions, offsetting weakness in real estate, industrial services and transport infrastructure in the UK. We are also more confident in an improved billing ratio and profitability YOY going forward, and reiterate our BUY with a raised target price of SEK194 (185).
- Ebba Bjorklid
Sweco (Buy, TP: SEK185.00) - Billing ratio improvement
Q2 saw the long-awaited reversal of the negative billing ratio trend. We expect the billing ratio to continue to improve YOY in H2 and beyond, given the large-scale actions taken in H1. This should benefit profitability alongside cost-cutting, accelerated efficiency improvements and a leaner organisation. We reiterate our BUY and have increased our target price to SEK185 (169).
- Ebba Bjorklid
Sweco Minor model adjustments
We have updated our 2024e EBITA, owing to temporary market headwinds in primarily Sweden, Finland and the UK having more pronounced effects than we previously expected in Q2. We do not consider these changes to be material, and we have not changed our BUY recommendation. We have lowered our target price from SEK170 to SEK169. Due to either incomplete or out of date consensus, we have not included a consensus table for Q2 in this note.
- Ebba Bjorklid
Sweco (Buy, TP: SEK170.00) - Billing ratio set to improve
Going forward, we expect Sweco to more quickly reverse the negative billing ratio given the large-scale actions taken, and for profitability to see more support from cost-cutting, accelerated efficiency improvements and a leaner organisation. We reiterate our BUY and have increased our target price to SEK170 (137).
- Ebba Bjorklid
Sweco (Buy, TP: SEK137.00) - Billing ratio in focus for 2024e
We expect Q4 market and demand dynamics to remain in Q1, with solid demand across most regions offsetting weakness the real estate, pulp and paper and manufacturing industry segments, supporting 10.1% sales growth YOY. However, profitability is expected to come under pressure. We reiterate our BUY and SEK137 target price.
- Ebba Bjorklid
Sweco (Buy, TP: SEK137.00) - Q4 profitability headwind set to ease
Sweco missed on profitability in Q4, due to restructuring costs, project write-downs, higher costs, and a lower billing ratio. However, we believe a significant proportion of these headwinds should not reoccur in 2024. We thus reiterate our BUY but have cut our target price to SEK137 (150).
- Ebba Bjorklid
- Ebba Bjorklid
Sweco (Buy, TP: SEK150.00) - Well positioned for strong Q4
We expect Q4 sales growth of 19% YOY on higher average contract fees offsetting high cost inflation and strong underlying demand in most regions supporting c8% organic growth YOY. We forecast an adj. EBITA margin of 10.7%, up 20bp YOY, backed by solid organic growth, efficiency improvements, and cost control, albeit partly offset by low profitability in the UK and Finland, which are affected by workforce right-sizing and corresponding restructuring costs. We reiterate our BUY but have raised our...
- Ebba Bjorklid
Sweco (Buy, TP: SEK140.00) - Onwards and upwards
At the CMD today (its first since 2016), management appeared confident in the outlook, and in the business and portfolio positioning. Focus was on: 1) levers to bring the billing ratio back to c75% over time; 2) structural growth drivers, especially the green transition; and 3) drivers of profitable growth and margin expansion. We reiterate our BUY and SEK140 target price.
- Ebba Bjorklid
Sweco (Buy, TP: SEK140.00) - Strong Q3 results
Sweco saw solid sales and profitability in Q3, as it was able to report strong organic growth, supported by higher average fees and solid employee growth, and mitigated lower demand in some areas by increasing its exposure to segments with higher demand. We reiterate our BUY and have raised our target price to SEK140 (135) on slightly higher 2023–2025 forecasts.
- Ebba Bjorklid
Sweco (Buy, TP: SEK135.00) - Expecting a solid Q3
We expect 18% YOY sales growth in Q3 on higher average fees on contracts, offsetting high cost inflation (particularly wage growth), and strong underlying demand in most regions resulting in a steady flow of new projects, supporting c8% organic growth. We forecast an EBITA margin of 7.2%, roughly flat YOY, backed by solid organic growth, albeit partly offset by low profitability in the UK due to weakening infrastructure and commercial buildings markets. We reiterate our BUY and SEK135 target pri...
- Ebba Bjorklid
Sweco - Initiation of coverage - From strength to strength
We initiate coverage on Sweco with a BUY and SEK135 target price. We estimate 80%+ of its portfolio should benefit from the green transition and increased demand for services relating to European energy security, digitalisation, and urbanisation. In addition, we expect its growing scale, a more diversified portfolio, and the decentralised business model to support accelerated sales growth (8.9% on average for 2023–2025e) as well as margin expansion, and to further widen its relative performance ...
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