Administer - Behind the curve, earnings to recover

Silta drove the Q1 sales decline, profitability turn postponed

Administer's net sales in Q1 declined 6% y/y to EUR 17.8m, below our EUR 18.8m estimate. The miss was driven primarily by weakness in Silta, where customer contract terminations weighed on revenue, while EmCe also remained soft as delayed Microsoft Business Central project starts burdened sales, although the absolute impact on group sales was more limited. Econia and the accounting firm business developed broadly in line with our expectations, with Econia showing signs of stabilization and the accounting firm business remaining essentially flat supported by acquisitions. Reflecting the weaker net sales development and cost savings not yet fully materializing, EBITDA declined sharply to EUR 1.2m (Q1'25: EUR 2.0m), below our EUR 2.2m estimate. Management indicated that corrective measures are ongoing, with the full effect expected to become visible in H2. The transformational Sarastia acquisition was finalized at the end of the review period, with the acquired business consolidated into Administer's figures from April 1 onwards.

Sarastia now in our forecasts

Administer issued FY26 guidance of EUR 105-115m net sales and EUR 6.5-9.0m EBITDA, representing the company's first formal outlook following the Sarastia consolidation. We have updated our forecasts and now expect FY26 net sales of EUR 109.8m and EBITDA of EUR 7.1m, placing us near the midpoint of the company's sales guidance range but toward the lower end on profitability. Our assumptions reflect caution around Sarastia, as we model the acquired business continuing its recent declining sales trend until clearer evidence of stabilization and margin improvement emerges. We have also made other estimate changes across business areas, with the net impact being negative, driven by Silta's weaker sales trajectory. EBITDA is expected to be H2-weighted, in line with management commentary, as integration synergies and broader cost optimization measures begin to materialize.

ACCUMULATE (prev. BUY) with a TP of EUR 2.4 (prev. 2.6)

Administer is valued at 12-9x adj. P/E on our 2026-27E estimates. While we continue to view the Sarastia acquisition as a potential long-term value driver, near-term visibility remains limited and execution risks elevated. The more attractive 2027 valuation already assumes a profitability improvement, driven by Sarastia's turnaround, realized cost savings, and a gradually improving market environment. As uncertainty around this improvement remains high and clearer operational progress is still needed, we lower our TP to EUR 2.4 (prev. 2.6) and downgrade to ACCUMULATE (prev. BUY).