Sandvik's Q3 Results Boosted by Cyclical Recovery Despite Supply Chain Issues; Shares Fairly Valued

Narrow-moat Sandvik’s results are tracking in line with our full-year expectations. A cyclical recovery across all operating segments was the main contributor behind organic third-quarter revenue and order growth of 13% and 21%, respectively. Longer lead times for Sandvik’s faster-growing mining equipment and supply chain bottlenecks explain the mismatch between revenue and order growth. Acquisitions added a further 10% to revenue growth, but had a dilutive impact on margins. We maintain our SEK 193 fair value estimate and view shares as fairly valued.