Sandvik Q1’26 beat expectations, with a short-term tungsten price tailwind lifting earnings forecasts; JPMorgan maintains Overweight and raises the target price to Skr450.

Overview

JPMorgan released its summary of Sandvik’s Q1’26 results. The core conclusion is that the company’s first-quarter orders and margins both exceeded expectations, the Mining demand environment is strong, and the Machining business is receiving a short-term profit tailwind from rising tungsten prices and a lag in cost recognition. The report maintains an Overweight rating and raises the Jun-27 target price from Skr370 to Skr450.

Core views

The report’s core views include: first, Mining orders were still 7% above expectations despite a high base, showing a strong demand backdrop for mining equipment supported by high gold and copper prices; second, Machining business orders were 4% above expectations, and margins benefited from prices moving first while raw material costs entered COGS with a lag; third, the profit tailwind from tungsten prices is not permanent, and while Q2 may still benefit meaningfully, it could reverse later this year and next year; fourth, Sandvik remains a favored name for JPMorgan due to structural growth, improving asset quality, management execution, and the potential rerating of the short-cycle business.

Analysis framework

The report updates Sandvik’s investment rating and target price by combining Q1 earnings variance, segment order performance, management commentary on the conference call, tungsten prices and cost pass-through lags, earnings forecast revisions, reverse DCF valuation, and valuation multiples relative to covered mining OEM companies.

Methodology notes

• Earnings trackingQ1 results variance analysis

  Orders and margins beat expectations

  Operating momentum is assessed using the variance between actual Q1 orders, segment orders, and margins versus market or JPMorgan expectations.

• Cost and price pass-throughRaw material price lag analysis

  The phased impact of higher tungsten prices on Machining margins

  In Sandvik Cutting Tools, there is about a 9-month lag from raw material inflation to COGS, while in the Powder business there is about a 1-month lag to ATP pricing; therefore, rising tungsten prices create a short-term net tailwind between revenue pricing and cost recognition.

• Valuation methodsReverse DCF valuation

  Deriving the target price using the target multiple and 2027 forecasts

  JPMorgan raises the 12-month forward EV/adjusted EBITA multiple from 15.7x to 17x, applies it to 2027 forecasts, and then rolls it forward 6 months to derive the Jun-27 target price of Skr450.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Sandvik equity (SAND.ST / SAND SS)

  Core covered name

  Strengths

  Strong order momentum, Mining exposure supported by gold and copper prices, a portfolio more focused on higher-margin businesses, and improved management execution.

  Weaknesses

  The short-cycle business had previously been a drag, and valuation has already been affected by strong share price performance since the start of the year.

  Comparison

  The report says management’s comments on the Mining backdrop were more positive than Metso’s on the same day, and it adjusted the valuation multiple to align with covered Mining OEM companies.

  Risks

  Tungsten price volatility, macro weakness, delays in large Mining OE orders, expensive acquisitions delivering weaker-than-expected returns, and FX headwinds.

• Tungsten

  Short-term cost and pricing driver of Machining margins

  Strengths

  Rising prices create a net profit tailwind during the period before costs are recognized with a lag.

  Weaknesses

  The tailwind is temporary and may reverse as costs enter COGS.

  Comparison

  Cutting Tools has about a 9-month lag, while Powder has about a 1-month lag, so transmission speed differs across businesses.

  Risks

  Large tungsten price swings would alter earnings forecasts and the margin path.

• Gold and Copper

  External supporting factors for the Mining demand backdrop

  Strengths

  High gold and copper prices support mining capex and the order environment.

  Weaknesses

  A decline in commodity prices could weaken Mining order momentum.

  Comparison

  The report believes part of the difference between Sandvik’s and Metso’s commentary stems from differences in commodity exposure.

  Risks

  Falling metal prices or mining customers delaying large equipment decisions.

Key data

• Q1 orders beat expectations+6%Overall orders were 6% above expectations.
• Q1 margins beat expectations+30bpsMargins were 30 basis points above expectations.
• Machining order variance+4%Machining orders performed positively.
• Mining order variance+7%Still above expectations despite a high base, showing strong mining demand.
• Adjusted EBITA forecast revision+8% / +2% / +7%The report says forecasts were raised assuming tungsten prices remain at current levels.
• Target priceSkr450.00Jun-27 target price, previous Skr370.00.
• Current priceSkr400.50As of April 23, 2026.
• FY26E revenueSkr143,031mnThe table shows FY26E revenue, up 18.5% versus FY25A.
• FY26E adjusted EBITASkr29,474mnFY26E adjusted EBITA margin of 20.6%.
• YTD absolute performance30.5%The price performance table shows YTD absolute return.

Impact & implications

For investors, the report reinforces the positive case for Sandvik as a high-quality European capital goods exposure to mining and machining equipment. Short-term earnings may continue to be supported by the tungsten price lag effect, but this factor is cyclical and reversible, so the more important medium- to long-term considerations remain structural Mining demand, normalization in the short-cycle business, portfolio improvement, and management execution.

Risks

• Tungsten price volatility causes the Machining margin tailwind to be weaker than expected or reverse earlier than expected.
• A worsening macro backdrop puts greater pressure on the short-cycle business.
• Customers delay decisions on large Mining OE orders.
• Expensive acquisitions fail to deliver expected returns.
• Significant FX headwinds affect revenue and earnings.

What to watch

• Whether Q2 continues to realize the net profit tailwind from the tungsten price lag.
• Whether the tungsten tailwind begins to reverse in 2H and 2027.
• Whether Mining orders can remain strong against a backdrop of high gold and copper prices.
• Whether PMI returns to around 50 and drives normalization in short-cycle end markets.
• Changes in Sandvik’s valuation multiple relative to Mining OEMs and European capital goods peers.