Detection Technology - Improving from the soft base
DT’s Q1 revenue was slightly higher than we estimated, while EBITA was in line. We make only small downward estimate revisions as Q2 outlook is a bit softer than we expected, but we continue to expect close to 10% growth for FY’26.
Q1 was relatively strong, Q2 slightly more muted
DT’s EUR 25.3m Q1 revenue was a bit above the EUR 24.3m/24.4m Evli/cons. estimates as medical and industrial landed slightly higher than estimated while security was in line. Industrial grew the fastest at a rate of 24% y/y, driven by food industry line scanning solutions, due to all regions including China. The EUR 2.4m EBITA matched estimates, gaining EUR 1m y/y. DT’s growth will continue in Q2 and Q3, however we previously expected industrial would still grow at a double-digit rate in Q2 but the outlook for that quarter is now more muted.
All applications and regions are growing this year
Industrial saw a very strong Q1, however growth doesn’t continue in Q2 partly due to the high volume seen in the preceding quarter as well as the fact that the comparison period was already high. We now estimate mid single-digit growth for Q2, while we previously expected 10%, as we see industrial Q2 top line down 5% y/y but up 15% q/q; our H1’26 industrial revenue estimate thus stays almost unchanged at about EUR 10m. We previously estimated Q2’26 EBITA to gain EUR 1.0m y/y but now estimate an increase of EUR 0.6m, while our H2’26 estimates remain virtually intact. We still see DT reaching close to 10% growth in FY’26, however the mix now seems slightly less favorable than before as it tilts a bit more towards medical than we expected. DT’s volumes are in any case growing across the line. We nevertheless continue to estimate EBITA margin at about 12%, which would imply an EBITA gain of EUR 3.5m y/y.
Earnings multiples remain unchallenging in basically any case
DT is valued 9.5x EV/EBIT on our FY’26 estimates, which isn’t a challenging level especially since earnings growth has good potential to continue next year when the multiple declines to 7x on our estimates. It’s yet a bit early to say how much exactly DT’s earnings will rebound this year, but even if growth and profitability end up falling short of our estimates the earnings multiples will remain unchallenging. We retain our EUR 12.0 TP and BUY rating.