Kepler Cheuvreux has downgraded its rating on Atrium Ljungberg (STO:ATRLJB) from Buy to Hold, while keeping the analyst price target at SEK 36. The adjustment reflects a smaller runway for share price appreciation after recent gains and a less favorable earnings outlook, according to the research note.
The broker points out that Atrium Ljungberg's stock has risen roughly 6% since Kepler Cheuvreux upgraded it in October. With the shares trading near SEK 33.77, the buffer to the SEK 36 target is limited, reducing the appeal of an outright Buy recommendation in the firm's view.
Central to the downgrade is a weak projection for funds from operations (FFO). Kepler Cheuvreux models a compound annual growth rate for FFO of -2.5% over 2025-2027, which the firm identifies as the weakest among Nordic property companies it covers. That outlook is a primary driver behind the more cautious stance.
On rental income, the research house expects a -0.5% sequential change in the fourth quarter compared with the third quarter, a forecast that runs contrary to market consensus forecasts of 1.4% growth. The projection is consistent with management guidance indicating sequentially lower rental income in Q4, in part attributable to contract losses including Fujitsu.
Despite downgrading the rating, Kepler Cheuvreux continues to view some valuation support for Atrium Ljungberg. The firm argues the company merits a 10% premium to the historical 10-year average price-to-FFO ratio for the sector, pointing to Atrium Ljungberg's large project inventory focused in Stockholm. The brokerage notes the company has the capacity to invest nearly SEK 40 billion into these projects.
Interest rate assumptions in the note add to the tempered earnings outlook. Analysts expect the company’s average interest rate to remain at 3.2% in Q4, but to rise to 3.24% in 2026 and 3.50% in 2027 as advantageous hedging positions unwind over time. That gradual increase in funding costs is expected to apply additional pressure to earnings metrics.
Clear summary
Kepler Cheuvreux downgraded Atrium Ljungberg to Hold while maintaining a SEK 36 target, citing limited upside after a 6% share gain since October, a projected -2.5% FFO CAGR for 2025-2027, a forecasted Q4 rental income decline, and rising average interest rates as hedges mature. The firm still applies a 10% valuation premium based on the company’s substantial Stockholm-focused project pipeline and near SEK 40 billion investment capacity.