Norwegian defense industry company Kongsberg Gruppenin the stock fell sharply on Thursday after the company announced its July-September interim report. The news agency reports about it Bloomberg.
The company’s stock plunged 18 percent, even though the company managed to increase its turnover by 12 percent and the company’s profit also improved from the comparison period.
However, the turnover development fell short of analysts’ expectations, which weighed on the company’s course.
Kongsberg announced at the earnings release that it will split and list its marine technology business as its own company in order to focus on the defense industry.
According to most analysts, the price drop was an unnecessarily exaggerated strong reaction to the result. In the past, many analysts have given the stock a sell recommendation due to the high valuation levels.
“We consider the market reaction to be excessive,” wrote the investment bank SB1 Marketsin analyst Ole-Petter Sjøvold in the memo, in which the bank raised the stock’s recommendation to buy level.
According to Sjøvold, the strong order backlog and potential near-term contracts are in favor of raising the recommendation.
High valuation levels have curbed analysts’ enthusiasm for the company’s stock over the course of the year. With the price drop, the stock may no longer seem so expensive. However, some experts who follow the company remain skeptical.
Investment bank Arctic Securities ASA:n analyst Lukas Daul estimates that Kongsberg, which previously benefited from the rise in the profile of the defense sector in Europe, may have lost its position as investors’ favorite. At the same time, the bank raised the recommendation on the stock to the hold level.
“Investors’ confidence will not return until the division is completed,” Daul estimates.