106%+ returns, 97% win rate: A fresh list of AI-picked stock is out NOW
On Monday, Citi analyst Klas Bergelind adjusted the price target for Alfa Laval AB (ALFA:SS) (OTC: ALFVY), increasing it to SEK429.00 from the previous SEK408.00. The analyst maintained a Neutral rating on the stock. The revision in the price target is attributed to the recent easing of macro concerns following tariff relief, as discussed in a sector piece dated April 12. The company, currently valued at $17.7 billion, has demonstrated strong financial health according to InvestingPro analysis, with a solid EBITDA of $1.27 billion and moderate debt levels.
Bergelind noted that while the easing of tariffs has been factored into the forecasts, a significant slowdown in earnings momentum is anticipated from 2026 due to diminishing growth and margins from the company’s backlog. The book-to-bill ratio is expected to remain slightly below 1 in the coming years, indicating a large backlog but lacking order momentum. According to Bergelind, an inflection in orders is crucial for the stock to outperform again. The company currently trades at a P/E ratio of 22.4x and maintains healthy profit margins, with a gross profit margin of 35.1%.
Despite the potential for upside in the Street’s 2025/26 earnings estimates for Alfa Laval’s Marine margin, driven by product mix and Framo, the analyst believes this will not lead to a meaningful increase in the group’s EBITA. The margin momentum is considered to be backward-looking, with a strong product order cycle required for a significant change, which Bergelind views as unlikely. The company has demonstrated revenue growth of 6.4% over the last twelve months, with analysts forecasting 7% growth for the current fiscal year.
The analyst also pointed out that growth in the Oil & Gas sector is projected to slow down, and a more subdued growth in Marine orders outside of product tankers is expected from the second half of the year. Additionally, recent volatility in margins outside of the Marine sector is likely to constrain any potential re-rating of the stock. Despite these concerns, the analyst observed that the HVAC sector appears to be bottoming out, and Data Center growth remains robust.
In other recent news, Alfa Laval AB has seen a notable change in its stock rating. UBS analysts have upgraded the company’s stock from ’Sell’ to ’Neutral,’ while maintaining the price target at SEK398. This adjustment comes in response to a decline in the company’s share price due to tariff impacts, bringing it closer to historical valuation multiples observed in peak earnings years like 2015 and 2019. Despite concerns about potential recession and deglobalization trends affecting Alfa Laval’s revenue, especially in the marine and energy sectors, the analysts have shifted their stance due to the current price level. The defensive nature of the company’s food sector, which constitutes 38% of its business, does not fully shield it from cyclical risks. UBS analysts also highlight the uncertainty surrounding the impact of shipping decarbonization on Alfa Laval’s business. However, they note that the current price level does not present sufficient downside to justify a ’Sell’ rating. Investors will be keenly observing how Alfa Laval maneuvers through economic challenges and explores opportunities in emerging areas like energy sector growth and shipping decarbonization.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.