* We cut '26e-'28e adj. EBITA by 1% on temporary DK weakness
* Positive development below surface, should be more visible from Q4
* Fair value range maintained at SEK 40-80 per share
Denmark overshadowed underlying improvements
Coor delivered a stable Q2 report, although margins in Denmark surprised a bit negatively, resulting in adj. EBITA 2% below our expectation (adj. EBITA +3% y-o-y). Denmark earnings were expected to be soft due to the announced contract losses in late 2025, but the margin of 2.8% (vs. 3.7% in Q1) was surprising. Management highlighted that the contract losses have resulted in additional challenges within delivery, which should be of a temporary nature as the Danish business recalibrates. As such, we slightly lower Denmark H2'26 EBITA, but do not extrapolate the weak Q2 margin. Meanwhile, the rest of the business is showing promising signs. Norway is holding up well against unusually high variable volumes last year, and both Sweden and Finland grew organically and improved margins. Management also highlighted promising tendering activity. For this reason, we anticipate accelerated adj. EBITA growth in the coming quarters (6%/14% y-o-y in Q3/Q4).
Limited changes to '26e-'28e adj. EBITA
We cut sales and adj. EBITA by 1% for '26e-'28e, respectively. The effect on 2026 EBIT and EPS is greater, mainly due to restructuring costs incurred in Q2, as well as an SEK 20m one-off cost in Q3 resulting from an unfavourable ruling in Denmark regarding a customer case from 2022.
The new strategy to bear fruit from Q4
While Q3 will likely remain pressured by tough comps and the challenges in Denmark, we think Coor will return to solid earnings growth from Q4, supported by the new strategy presented at the CMD, which we find convincing. By returning to organic growth, and reaching margins >5.5% over the coming year, we see strong adj. EPS growth, cash generation and a solid gearing of 2.2x in 2027. The share is trading at 10x adj. P/E and P/FCF on 2027e, with 5% dividend yield.