Axfood downgraded to “hold”

12/17/03 - Deutsche Bank

LONDON, December 17 (New Ratings) – Analyst Mattias Karlkjell of Deutsche Bank downgrades Axfood (AXFO.ST) from “buy” to “hold.” The target price is set to SEK165.

Shares of Axfood, a retail chain operating on Sweden and Finland, are currently trading at SEK169.50.

According to Deutsche Bank's research note published this morning, the current downgrade in rating is primarily based on valuation. Axfood's share price has gone up by 25% since its Q3 results were announced on October 22, the analyst says. The rise in the company’s share price was driven by the restructuring measures in its Hemköp and Willys divisions, the analyst adds.

According to the analyst, Axfood's restructuring efforts and improving profitability have already been factored into the 2004 estimates and the current stock price. Deutsche Bank believes that the company's stock has limited upside potential in the near term.

The EPS estimates for 2003 and 2004 are SEK12.20 and SEK13.24, respectively.

Deutsche Bank downgrades Axfood from “buy” to “hold.”