No help to expect from improving market - Q3 preview

We believe the key in the InfraCom Q3 results will be indications of the first improvements from moving units closer and increased collaboration. As one quarter, especially the one over the summer, is likely too short to show any material difference, any comments from management on the initial findings and potential impact for 2027 will be more important. Accelerated cross-selling between units and top-line growth that is faster than the overall market would be clearly welcome, and something we do not believe the market is expecting, given the current valuation below peers. We reiterate our fair value range of SEK15–30.

No help from market recovery to expect in Q3. For Q3, we expect net sales of SEK197m, which we estimate equates to an organic decline of 3%, similar to Q2 but an improvement from Q1. The gross margin is usually seasonally weak in Q3, while opex is seasonally lower. This leaves our EBIT forecast at SEK19m. This is below the level in Q3 2025, as we assume a lower gross margin and higher depreciation. We believe the larger business units (Communication and Managed Services) will have performed slightly better than the smaller ones.

No estimate revisions. We make no changes to our estimates ahead of the Q3 results.

Too early for effect from moving units closer. Management stated in connection with the Q2 results release that it will move units closer to speed up decision-making and improve deliveries. We believe this is the correct move, especially in order to get more out of the Managed Services unit. That said, we reiterate that we believe an improved market is needed to significantly improve growth rates. We doubt that Q3 will indicate any market turnaround, as peers have reported growth rates more in line with previous quarters.

Valuation. InfraCom is now trading at a P/E of c6x for 2026e and 2027e vs peer medians of 16.3x and 14.2x respectively. Our SEK15–30 fair value range equates to a 2027e P/E of 8–15x.