We value Assa on an average of DCF and 2026E EV/EBITA, rounding our target price of SEK280 to the nearest SEK5. Our DCF valuation of SEK295 is based on normalized organic growth of 4%, terminal growth of 2%, WACC of 8.0% (with a beta of 0.95x), and a normalized/terminal EBIT margin of 16.5%/16%. On our multiples approach (valuation of SEK266), we use a target EV/EBITA of 13x 2026E, a ~25% premium to the capital goods sector (vs 25-30% historical).

We see the following as key upside risks to achieving our target price:

1) More resilient non-residential construction activity. This could come from, for instance, stronger-than-expected developments in institutional construction verticals.

2) Continued pricing momentum could support organic growth even if volumes slow.

3) Accretive M&A. Assa Abloy has a long track record of industry consolidation, so new deals could drive upside to EPS momentum.

We see the following as key downside risks to achieving our target price:

1) Stubbornly high interest rates, or further rate hikes, could lead to renewed downside risk for construction markets.

2) If Assa is unable to offset the impact of US tariffs on profits, it could see earnings downgrades.

3) Any further strengthening in the SEK could lead to earnings downgrades.