Lagercrantz reported solid numbers with EBITA slightly above our estimates. The EBITA margin was above our estimates, sequentially up and stronger on a year to year comparison. The cash flow was strong in the seasonally weaker fourth quarter and we believe it is likely to continue to be strong in the quarters ahead as is normal for the company when organic growth is dampened.

Lagercrantz added two acquisitions in the quarter with Nordic Road Safety and Prido. Prido was added into Niche Products, which showed an exceptional quarter with strong margins. Lagercrantz are able to be opportunistic with acquisitions in the division a strategy that has been a homerun since the start twelve years ago. We believe a larger share of acquisitions ahead will continue to be in this division.

We raise our Base Case from SEK150 per share to SEK180 per share following the report. Lagercrantz continue to show solid EPS growth, and while we expect the organic growth rate to continue to be muted in the near term, we believe growth from acquisitions will continue to support solid growth ahead. With the positive share price development in the last months we think there is limited room for multiple appreciation ahead and that EPS growth will drive the stock price onwards in the long term.