Equity valuation Hexagon

Abstract

This dissertation seeks to establish the optimal target price for Hexagon, a leading global player within geospatial and industrial technology solutions, offering insights to guide investment decisions4whether to hold, buy, or sell in relation to current market conditions. The central inquiry guiding this study is: "What is the fair value per share of Hexagon as of December 31st 2023, and does it result in a hold, buy, or sell recommendation for existing and prospective investors?" The valuation of Hexagon, listed on the Swedish OMX30, entails a comprehensive analysis encompassing company performance, competitor positioning, and market dynamics within the geospatial and industrial technology sectors. This evaluation includes historical performance alongside future projections of Hexagon's financials and industry trends. To conduct the valuation, forecasts have been made for the income statement, balance sheet, and cash flow statement to ensure a well-rounded assessment. The valuation methodologies employed include the Discounted Cash Flow (DCF) approach, incorporating terminal value computations utilizing both the Gordon Growth and Exit multiple methods. Additionally, a relative valuation, benchmarked against industry peers, was considered. The culmination of these valuation techniques yielded a target price range of SEK 128.4 - 148.2 per share. Comparing this range against the closing price of SEK 120.95 on Dec 29th 2023, a buy recommendation was issued, accompanied by an estimated upside potential of 6.2% - 22.5%. Moreover, the buy recommendation aligns with the findings of the equity research report published by SEB with a target price of SEK 130.

Date of Award	9 May 2024
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	José Carlos Tudela Martins (Supervisor)