Vaisala - Cutting-edge quality with high price tag
Vaisala’s journey has developed well and with its revised strategy the company continues to seek scalable growth within high-end measurement solutions. We find Vaisala’s valuation stretched but a solid expected 14% annual EPS growth is in favor of holding the stock.
Global player in value-adding high-end measurements
Vaisala operates in niche segments of weather, environmental and industrial measurements. The company focuses high value-adding processes and delivers mostly customized solutions. The company emphasizes its R&D activities with annual investments of 13% of net sales on average. We see Vaisala having solid competitive advantages, such as science-based technology leadership, elevated knowledge in high-mix/low-volume operations, a broad product portfolio, and fast and reliable delivery. Moreover, bolt-on acquisitions have boosted the company’s market share and provided new growth opportunities in new market areas.
Continuity with the revised strategy
Vaisala updated its well-succeeded strategy in 2021 to better reflect the core of its business, vision, and megatrends applying to its industry. The company highlights its product and technology leadership, deep customer understanding and application know-how, scalability, and engaged and talented personnel in its current strategy. In our view, the execution of the company’s strategy has started well. Vaisala has grown quite profitably in 2021 and 22, and in early 2022, the company acquired US-based SaaS company AerisWeather to increase its technological capabilities and scalable digital business.
Uncertain market environment forms some gray clouds
We see the current market environment as quite uncertain and with slowing GDP growth and industrial activity, we revised our 2023-24 estimates slightly downwards. The company’s valuation is quite stretched, and valuation multiples have no room for any upside in our view. With our revised estimates and Vaisala’s elevated valuation, we lower our TP to EUR 40.0 (prev. 43.0) and retain HOLD-rating.
Vaisala operates in niche segments of weather, environmental and industrial measurements. The company focuses high value-adding processes and delivers mostly customized solutions. The company emphasizes its R&D activities with annual investments of 13% of net sales on average. We see Vaisala having solid competitive advantages, such as science-based technology leadership, elevated knowledge in high-mix/low-volume operations, a broad product portfolio, and fast and reliable delivery. Moreover, bolt-on acquisitions have boosted the company’s market share and provided new growth opportunities in new market areas.
Continuity with the revised strategy
Vaisala updated its well-succeeded strategy in 2021 to better reflect the core of its business, vision, and megatrends applying to its industry. The company highlights its product and technology leadership, deep customer understanding and application know-how, scalability, and engaged and talented personnel in its current strategy. In our view, the execution of the company’s strategy has started well. Vaisala has grown quite profitably in 2021 and 22, and in early 2022, the company acquired US-based SaaS company AerisWeather to increase its technological capabilities and scalable digital business.
Uncertain market environment forms some gray clouds
We see the current market environment as quite uncertain and with slowing GDP growth and industrial activity, we revised our 2023-24 estimates slightly downwards. The company’s valuation is quite stretched, and valuation multiples have no room for any upside in our view. With our revised estimates and Vaisala’s elevated valuation, we lower our TP to EUR 40.0 (prev. 43.0) and retain HOLD-rating.