Another step forward - Q4 review

Like Q3, the Q4 results were a step in the right direction, with cost discipline in particular again yielding improved earnings. The new long-term EBITA margin target of 12–15% is less aggressive than the previous ambition, but we believe – rightly – reflects a less optimistic stance on Managed Services, more aligned with the market view. We reiterate our fair value range of SEK24–35.

Profitability focus. The Q4 results were a continuation of the trends seen in Q3, where cost reductions yielded a positive profitability impact. The gross margin was seasonally low, while the top line and EBIT beat our expectations – which was encouraging, signalling a step back towards stronger profitability, and we think the market will appreciate this focus.

2026–27e earnings raised, partly explained by the lower cost base entering 2026, while our adj. EPS (factoring in amortisation of acquisitions) further benefits from the greater clarity on the size of this amortisation. As a result, we raise our 2026e adj. EPS by 8% and 2027e by 11%.

Back to its roots. After a couple of difficult quarters following the Connect acquisition, top-line growth and profitability are starting to improve. The Zedcom acquisition is the first significant M&A activity in a while, which, combined with a more solid company, should improve momentum, in our opinion. We believe most of the impact of converting to monthly recurring revenue rather than booking one-off sales (resulting in a decline in revenue) is behind InfraCom. In addition to improving top-line growth, we also see stability in the gross margin and an EBITA margin approaching the target as key potential catalysts for a re-rating.

Valuation. We maintain our fair value range of SEK24–35 (derived from a blend of peer group multiples, a DCF model and an M&A scenario), implying a 2026e EV/EBITA of 7.5–11.0x and P/E of 10–15x.