AXFOY - Axfood: Some Weakness From The Last Quarter But Not Yet A 'BUY'

2024-07-13 08:58:05 ET

Summary

• Axfood FY23 results show double-digit net sales increase, outperforming the market.
• 1Q24 results were solid, but later results saw weakness, leading to an 8-9% drop in market trading.
• The company's valuation is inflated, with limited upside potential, warranting a "HOLD" rating at 260 SEK/share.

Dear readers/followers,

It's been some time since I updated on Axfood ( OTCPK:AXFOF ) ( OTCPK:AXFOY ). This is one of Sweden's largest and, after the de-listing of ICA AB, the only remaining publicly available company in the grocery space in Sweden with such specs. The company's FY23 results were excellent, outperforming the broader market and recording a double-digit net sales increase. Initial 1Q24 results were quite solid, perhaps justifying some of the premium here - but later results, which were out today (as I am writing this article), saw enough weakness to where the company was down 8-9% in market trading today.

So what exactly happened?

That's what we'll look at as we update our thesis on Axfood at this particular time. I may raise this PT in the future to reflect different upsides for this company, but Axfood, since the privatization and pulling off ICA AB from the stock market, remains virtually the only FMCG in the entire Swedish market that investors can actually buy....

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