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On Wednesday, Kepler Cheuvreux adjusted its stance on Samhallsbyggnadsbolaget (SBBB:SS), downgrading the stock from Hold to Reduce. The research firm also increased its price target for the company’s shares to SEK 4.50, up from the previous SEK 3.70.
The downgrade came despite a first-quarter report that surpassed expectations. Kepler Cheuvreux highlighted that the financial income reported was unusually high and not indicative of the company’s ongoing earnings potential. Additionally, earnings from associates and joint ventures did not align with their potential, making it challenging to draw firm conclusions from the quarterly report.
Kepler Cheuvreux anticipates that both financial and administrative costs will be lower than previously expected, which may offset some of the negative impacts from the recent rights issue. This expectation, alongside earnings revisions, the time value effect, and a halved risk premium—from 20% down to 10%—contributed to the decision to raise the price target. The reduced risk premium reflects the entry of a new major shareholder, Aker Property Group, which now holds 9% of the capital and is seen as adding stability to the company.
Despite the positive aspects that led to a higher price target, Kepler Cheuvreux expressed concern over the stock’s valuation. With Samhallsbyggnadsbolaget’s share price having surged by nearly 80% in the last two months, the firm considers the current valuation to be excessive, prompting the downgrade to a Reduce rating.
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