Analyst Note| Denise Molina, CFA |
ABB shares look attractive after declining 15% since mid-March. We are maintaining our wide moat rating and CHF 35 fair value estimate. The company recently announced the delay of its e-mobility unit's initial public offering due to less favorable capital market conditions. The e-mobility unit is less than 2% of group revenue and is not the central part of our investment case. Our cash flow forecasts and company valuation depend more on the outlook for the ABB's restructuring execution as well as broad industrial demand for electrification components and automation equipment, including robotics. We see no change in the medium-term drivers for these. However, we are factoring in near-term slower demand from macro headwinds, mainly in our 2023 forecasts. With outsize demand since mid-2021, we factor in a cooling off of order and revenue growth in 2023, resulting in a reduction in our revenue growth assumption by around 100 basis points to 4% in 2023. Our 2022 forecasts are largely in line with company-provided consensus, but our 2023 EBITA operating forecast is around 4% below consensus.