Pareto has reiterated its Buy recommendation for engineering consultancy Sweco while lowering its price target to SEK 160 from SEK 185, according to a pre-earnings research note.
The firm forecasts organic growth of 3% and an EBITA margin of 10.5% for the first quarter. Organic growth projections have been revised downward by 2 percentage points, reflecting a SEK 75 million negative calendar effect and persistent weakness in real estate-related segments.
At the same time, Pareto highlights Sweco's significant exposure to the public sector and infrastructure as a relative strength in an uncertain market. While major investment projects are expected to be deferred, the analysts believe the company's public sector footprint positions it more robustly than many of its industry peers.
Pareto also notes that the stock continues to trade at a discount compared to international peers.
Sweco AB (publ) is a Sweden-based company engaged in the provision of consulting services within the areas of engineering, environmental technology and architecture. The Company offers multidisciplinary services in segments: The Buildings and urban areas segment develops solutions to help cities grow and become resilient, attractive places to live; The Water, energy and industry segment designs modern technological solutions that ensure society’s and industry’s access to clean water, reliable energy supply and increased resource efficiency; The Transportation infrastructure engaged in the design sustainable transport solutions that enable tomorrow’s cities and societies to manage a growing population and new mobility demands; and The Architecture integrated architecture and engineering operations in seven of its eight main markets.
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