Citi removes Sandvik from its 'Focus List Europe', but retains a'buy' rating on the stock as it believes the company will continue to make goodprogress in 2013 and the valuation remains attractive.
"At the end of November ... the company announced a sizable restructuringprogram in addition to what had already been achieved. We think therestructuring story is now better understood by the market as Sandvik reratedsince then," Citi says in a note.
"However, we believe any further substantial re-rating would require Sandvikto dispose of its still underperforming business, which might take 2-3 years."
On Citi's forecasts for 2013, Sandvik trades at a price-to-earnings ratio of14.4, versus 14.6 for the sector, and an enterprise value/earnings beforeinterest and taxes ratio of 10.6, versus 11.1 for the sector, the note says.
Sandvik shares are down 1.2 percent on Wednesday, underperforming a 0.3percent dip for the broad STOXX Europe 600 index.
Companies in Citi's European focus list include Anheuser-Busch InBev, Adidas, Aviva, Barclays and BG Group.
Reuters messaging rm://atul.prakash.thomsonreuters.com@reuters.net