Atlas Copco's Vacuum Technique Unit Offers Upside Potential — Market Talk

Atlas Copco shares have outperformed the sector year-to-date, supported by easing geopolitical concerns, resilient U.S. industrial demand and a cyclical upturn in the vacuum technique unit, Bernstein analyst Alasdair Leslie writes. However, a miscommunication on vacuum technique demand at the Swedish industrial company's first-quarter results made investors fear the peak had been reached, he says. "Our discussions with the company suggest this is not the case, while historical order trends and revenue conversion dynamics indicate further upside potential." The outlook for the second quarter is supportive as currency effects unwind and the compressor technique unit benefits from easier comparables and resilient manufacturing industry data, Bernstein says. It rates Atlas Copco's stock at outperform with a 215 Swedish kronor price target. Shares rise 1.4% to 195.55 kronor. (dominic.chopping@wsj.com)