Axfood tops STOXX as Handelsbanken hikes rating on food inflation boost

Axfood AB

20/06/2022 13:20

** Handelsbanken raises its short-term recommendation for
Swedish food retailer Axfood  AXFO.ST  to "buy" from "hold", as
the broker expects strong earnings and high inflation to support
the stock in the months ahead 
    ** The broker also hikes long-term recommendation to "market
perform" from "underperform", but maintains target price of SEK
330
    ** Axfood shares are up 6.3%, on track for best day since
March 2020 and among top performers on the pan-European STOXX
600 index  .STOXX 
    ** Handelsbanken says food inflation is more than offsetting
softer volumes, which combined with earnings rebound from
Eurocash, the Bergendahls acquisition, and the elimination of
mat.se's losses promise a strong Q2 report for Axfood 
    ** "Key to our positive near-term stance is our belief in
Axfood's ability to pass on input cost inflation to consumers
without sacrificing margin, made possible by operating in a
highly consolidated market with limited demand fluctuations," it
says 
    ** The broker forecasts Q2 sales growth of 29% with adjusted
EBIT of SEK 810 million ($80.09 million), implying a 23% growth
year-over-year

($1 = 10.1138 Swedish crowns)

 (Reporting by Jacob Rasmussen)
 ((jacob.rasmussen@thomsonreuters.com))