Pre-results note
Focus shifts to 2027 recovery - Q3 preview
Hugo Lisjö
2026-10-28
14:26 CET
In our view, the exact sales and earnings figures for H2 2026 are less important than signs of a recovery in 2027. With management effectively guiding for 2026 to be a lost year in terms of profitability, our focus turns to developments supporting our expectations of a rebound next year. Specifically, we look for order backlog expansion, gross margin improvement and disciplined opex management. However, as the initiatives introduced in Q3 will take time to materialise, we do not necessarily expect a significant gross margin recovery already this quarter. After withdrawing owing to our role in the recent capital raise, we reinstate our fair value at SEK37–47 per share, factoring in the resulting dilution.
Small estimate changes. Following W5's preliminary 2026 figures published in late September, and with no indications of material changes since then, we maintain our operational forecasts, which remain in line with management's full-year expectations. Our estimate changes refer to changes in share count and net debt after the capital raise.
Looking ahead to 2027. Despite the margin challenges in 2026, W5 has continued to secure new contracts, a trend we expect to continue in Q3 despite the absence of announced major orders. For 2027, we forecast opex growth of c12% Y/Y, adjusted for EO costs in 2026, to support the anticipated revenue expansion. However, the main driver of our expected EBIT margin recovery is a rebound in the gross margin to c52%, still below the c59–64% achieved during 2023–25.
Strengthened balance sheet. On 30 September, W5 announced a SEK165m capital raise, in which DNB Carnegie acted as advisor, with approximately 65% of the proceeds earmarked for debt reduction, strengthening its financial position.
Fair value range reinstated at SEK37–47 per share. We shift from a 2026e valuation base to 2027e. Applying 2027e EV/EBIT multiples of 16–20x to our earnings forecasts, with the upper end broadly in line with Nordic defence peers, yields a fair value range of SEK37–47 per share.