Atlas Copco AB (ATCOA), the world’s largest maker of air compressors, declined as much as 2.5 percent after Berenberg Bank cut its recommendation on the shares to sell from hold and lowered its price target.
The stock was down 2.1 percent at 167 kronor at 12:32 p.m. in Stockholm, where the company is based. It was the second- biggest drop among companies on the OMX Stockholm 30 index.
First-quarter net income fell 12 percent to 2.99 billion kronor ($461 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.
“Weak first-quarter numbers in both the construction and mining businesses mean” that 2013 estimates “for those segments are considerably reduced,” Alexander Virgo and Benjamin Glaeser, analysts at Berenberg, said in a note to clients dated May 1. “Our revised forecasts reflect a more muted margin improvement than we had previously expected.”
Berenberg cut its target price for the stock to 165 kronor a share from 185 kronor.
“Our sell recommendation is driven by the high valuation and the belief that this relative premium will decline over the next 12 to 18 months,” the Berenberg analysts said. “In the short term, momentum in orders and sales is likely to be muted, meaning less support for the share price and valuation.”
Of the analysts who share their recommendations on Atlas Copco with Bloomberg, 15 advise holding the stock, 11 say buy, and six recommend selling. Their average 12-month price target for the shares is 191.13 euros.
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