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On Wednesday, Citi analyst Amit Harchandani reiterated a Neutral rating on Hexagon AB (HEXAB:SS) (OTC: HXGBF) with a price target of SEK124.00. Harchandani addressed the company’s announcement from earlier in the day regarding the Board’s direction for management to prepare for the spin-off of the ALI division and related businesses, collectively referred to as NewCo. This decision, initially revealed on October 25, has now been expanded to include the entirety of the SI&G division.
The SI&G division’s alignment with the remaining Hexagon operations was not seen as particularly strong, and further details on its financial and operational synergy with NewCo are anticipated. The separation and listing process is slated for completion in the first half of 2026, with NewCo expected to be listed in the United States after an initial temporary listing of SDR in Stockholm. Hexagon is set to provide more information regarding costs and other significant aspects at a later time.
Harchandani also mentioned a sum-of-the-parts (SOTP) valuation approach that assesses both entities separately based on 2026 EV/EBITA multiples, suggesting a fair value at SEK 127 per share. According to the analyst, this valuation remains unchanged despite the expanded scope of NewCo, as the perceived multiple would likely decrease due to the dilution in the financial profile caused by the expansion.
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