Atlas Copco AB (ATCOA), the world’s largest maker of air compressors, rose to its highest price in three weeks in Stockholm trading after Swedbank AB (SWEDA) said aftermarket sales will support margins and advised clients to buy the stock.
The company’s A shares rose as much as 1.4 percent to 180.6 kronor, the highest intraday level since April 29. Atlas Copco traded 1.2 percent higher at 180.2 kronor at 10:31 a.m. local time, making it the fourth-biggest gainer on the OMX Stockholm 30 Index. (OMX) The stock had dropped 4.4 percent in the three months to May 17 and fell 5.4 percent in the week ending May 3 after earnings missed analysts’ estimates.
The risks of weaker earnings from falling mining spending are overestimated by the market, Anders Roslund, an analyst at Swedbank in Stockholm, wrote in a note to clients today.
“We see stable margins and the strong cash flow generation from a growing aftermarket as the main valuation criteria.” Roslund raised his rating on Atlas Copco to buy from neutral and left his price estimate unchanged at 195 kronor.
First-quarter net income fell 12 percent to 2.99 billion kronor ($447 million), Atlas Copco reported on Apr. 29. That missed analysts’ estimates as customers reined in investment and European markets slowed. Mining companies including BHP Billiton Ltd., the world’s largest, are refraining from spending on new equipment as demand and prices for metals decline.
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