Lagercrantz reported stable figures with sales and EBITA in-line our estimates. The EBITA margin was sequentially down but stronger on a year to year comparison. The cash flow was slightly below our expectations driven by working capital build up in the seasonally weak second quarter and we expect improvements already in Q3. We believe Lagercrantz yet again shows what a stable company it is and it's impressive how the group is tackling challenging market conditions.

We are encouraged by Lagercrantz having managed to close a number of larger acquisitions with sales of well above SEK100m in recent times. Our view is that the company has strengthened its position among prospective sellers both through having built a strong brand and by benefitting from less competition from smaller Private Equity firms in recent years. We believe the first factor is long term and that the window is still open with regards to the second, which we expect Lagercrantz to continue to take advantage of.

We raise our Base Case from SEK185 per share to SEK195 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 next quarters, we believe growth from acquisitions will continue to support good growth ahead and expect the company to deliver EPS growth of c15% in the coming years. With the positive share price development after the Q2 report we think there is limited room for multiple appreciation ahead and that EPS growth will drive the stock price onwards in the long term.