Atlas Copco Posts a Mixed Fourth Quarter On Divisional Performance

Atlas Copco's fourth-quarter 2022 group orders and margins were disproportionately hit by weakness in its vacuum division, whose primary end market is the semiconductor manufacturing sector. We see the divisional weakness as temporary as we expect many sectors of the economy to continue supporting long-term semiconductor demand by expanding use cases. Full-year group earnings were slightly ahead of our forecasts with reported EPS of SEK 4.81, just ahead our SEK 4.73 estimate. We maintain our narrow moat rating and EUR 120 fair value estimate.