We Raise Epiroc’s Fair Value Estimate After Record Third-Quarter Order Intake; Shares Remain Rich

Strong demand for narrow-moat Epiroc’s niche mining equipment and aftermarket services show no signs of abating as commodity prices remain at high levels. Epiroc reported a record order intake in the third quarter, driven by a 43% increase in equipment orders. Organic order intake grew 24% and 3% against an already strong previous quarter to SEK 12.20 billion, which was superior to competitor Sandvik. We see no signs of demand deteriorating in the short term and traction for Epiroc’s digital offering grows. We moderately raise our fair value estimate to SEK 132 per share from SEK 125, as the higher order book gets converted into revenue in the next six to nine months. Shares remain richly valued, trading at 35 times company-compiled consensus earnings.