UBS cuts Alfa Laval on expected order intake 'digestion'

Alfa Laval AB

12/01/2024 14:06

** UBS cuts Alfa Laval  ALFA.ST  to "sell" from "neutral" as
it expects a pause in orders after a period of strong growth for
the Swedish engineering group
    ** The broker says 2024 could be a consolidation year for
Alfa Laval, given tough comparison periods, pockets of cyclical
weakness and a "digestion" period after strong order growth
    ** As this period slows, UBS expects the company's multiple
to de-rate, seeing attractive upside potential in other stocks
    ** UBS also sees a cyclical decline in heating, ventilation,
and air conditioning (HVAC) segment, as commercial construction
slows, heat pump adoption goes through a transition phase, and
lower energy prices could slow fossil energy capex
    ** It forecasts a 5% organic order decline in 2024, vs +3%
previously, slightly below a consensus of -3%
    ** "We anticipate share underperformance after 55%
outperformance in the past three years," UBS adds, cutting PT to
SEK 334 from SEK 430

 (Reporting by Elviira Luoma)
 ((Elviira.luoma@thomsonreuters.com))