DNB upgrades Sweden's Axfood to 'buy' on near-term positive momentum

Axfood AB

21/03/2023 09:51

** Brokerage DNB Markets upgrades Axfood  AXFO.ST  to "buy"
from "hold" as it finds risk/reward for Swedish food retailer
attractive with positive near-term earnings momentum 
    ** In Q1, brokerage sees revenue growth at SEK 19.5 bln
($1.89 bln) above SEK 18.18 bln consensus, helped by higher
prices and co's favourable discount position in Swedish grocery
market
    ** DNB forecasts 10% consensus beat on operating profit ex.
items, however adds gross margin expectation still below
pre-pandemic levels, showing current stress in the market
    ** Spiralling prices putting pressure on wider industry's
volumes, DNB sees AXFO's volumes also slightly weaker in
upcoming quarter
    ** However, while industry profitability is under pressure,
brokerage says AXFO's discount chain Willy's outperformed market
3x in 2022, adding that the group will probably continue to be a
"major success" in beginning of 2023
    ** Stock up 5% so far today, on track for best day since
June 20, 2022, if trend holds
    


($1 = 10.3258 Swedish crowns)

 (Reporting by Agata Rybska)
 ((Agata.rybska@thomsonreuters.com))