Doro - Consumer climate headwinds - ABG

Q2 report due on 15 July We cut Q2’22 sales and EBIT The share is trading at 9x-4x EV/EBIT in ‘22e-‘23e We expect a slow Q2, H2 should look better Given the current pressure on consumers and the economic uncertainty, we expect a slow quarter for the top line, and estimate just a small increase from Q1 levels. Moreover, we expect increased component and transportation costs, combined with the unfavourable USD/SEK, to lower the GM. Although the top line will likely be weak, activities will increase opex (e.g. trade fairs and recruitment to the R&D team to develop new products). This makes us believe that Q2’22 will not be a strong quarter. The combination of a poor top line, increased COGS and opex will likely lead to an EBIT margin largely in line with Q1’22 (1.5%). We expect a stronger end to the year, however, which is partly due to the normal seasonality and partly due to new products set for launch in Q3. Negative estimate revisions Due to the current headwinds, we lower our sales expectations for Q2’22e by 8%, and by 3% for the remainder of ‘22e. We also lower the GM slightly for each of the remaining quarters in 2022e compared to our previous estimates. Our GM estimates now correspond to 31.5%, 32.0% and 32.0% for Q2e, Q3e and Q4e. Moreover, we lower the EBIT margin to 1.5% in Q2’22e, which is in line with Q1’22. For full 2022e, we now expect an EBIT margin of 4.7% after some revisions on opex (apart from the lower gross profit). Finally, we have made some adjustments for ‘23e-‘24e following a change of analyst covering Doro. New fair value range of SEK 18-27 per share (20-31) With our estimate revisions, we lower our fair value range to SEK 18-27 from 20-31 per share, which corresponds to an EV/EBIT of 7x-12x for 2022e and 4x-6x for 2023e. The share is currently trading at 9x-4x EV/EBIT for ’22e-’23e on our current estimates. Läs mer på ABG Sundal Collier