Kepler Cheuvreux has adjusted its stance on Sandvik, lowering the recommendation to "hold" from "buy" while increasing its 12-month target price to 400 Swedish crowns from 370 crowns, an 8.1% rise. The change follows a strong share-price performance that the brokerage says has significantly reduced Sandvik's valuation gap against regional quality peers.
The analyst at Kepler, Nicklas Koller, noted that Sandvik's shares have rallied by close to 70% over the last year and now trade at a 13% discount to Nordic quality peers, compared with a five-year average discount of 25%, a level Koller describes as "reasonable." The broker's reassessment reflects both the stock's catch-up move and a view of the company that has evolved with its portfolio mix.
Koller described Sandvik as having "become a high-quality asset," citing a portfolio that is increasingly weighted toward mining, aftermarket and software and less dependent on traditional short-cycle industrial demand. That repositioning underpins Kepler Cheuvreux's constructive view on Sandvik's mining exposure, which includes sensitivity to gold and copper markets, durable aftermarket income and demand driven by equipment replacement.
The downgrade precedes Sandvik's second-quarter results, due July 17. Kepler Cheuvreux expects another solid quarter led by mining strength and an uplift in machining tied to tungsten-related dynamics. However, the broker said it is "reluctant to extrapolate current machining momentum beyond 2026," signalling caution about the sustainability of recent gains in that division.
Kepler Cheuvreux emphasised that recent machining strength appears driven by tungsten scarcity, customer pre-buying and favourable price and cost timing rather than a broad-based improvement in underlying demand. For the second quarter the brokerage models 21% organic order growth and 20% organic sales growth, projecting adjusted EBITA of 7.8 billion crowns. Those order and sales figures are broadly in line with consensus, while the adjusted EBITA forecast sits below consensus expectations.
In more granular modelling, Kepler Cheuvreux assumes mining organic order and sales growth of 15% with a 21.8% margin. For machining it models organic order growth of 35%, sales growth of 30% and an improved EBITA margin of 25.4%, up from 18.4% previously.
Following these updates, the brokerage raised its sales estimates by 12.6% for 2026 and by 21.8% for 2027. It also increased adjusted EBIT estimates by 25.0% for 2026 and 30.5% for 2027, and lifted adjusted earnings-per-share forecasts by 25.1% for 2026 and 30.5% for 2027.
Context and near-term outlook
The broker's repositioning to a hold rating reflects a combination of valuation compression following a strong share rally, and selective optimism across Sandvik's end markets. Kepler Cheuvreux remains positive on the mining franchise given exposure to precious and base metals, resilient aftermarket revenue and replacement-driven equipment demand. For machining, the firm expects a strong second quarter but stops short of assuming similar momentum will continue past 2026.
Details investors should note
- Target price raised to 400 Swedish crowns from 370 crowns.
- Shares have risen close to 70% over the past year and now trade at a 13% discount to Nordic quality peers versus a five-year average discount of 25%.
- Kepler Cheuvreux models Q2 organic order growth of 21% and organic sales growth of 20%, with adjusted EBITA of 7.8 billion crowns.
- Broker upgrades its sales and adjusted EBIT and EPS estimates for 2026 and 2027.