Etteplan - Near-term outlook remains muted
Despite the profit warning released ahead of the Q3 report, there were also positives in the report considering the challenging market conditions. However, the short-term outlook and visibility of a potential market turn remain muted.
Q3 fairly well in line despite guidance revision
Etteplan’s net sales grew 2.8% y/y in Q3, whereas organic net sales at comparable FX declined 2.6%. The Novacon acquisition continued to support topline and drove double-digit growth in Engineering Solutions, while Software and Embedded Solutions weighed on performance with sales down 18%. The trend already seen in Q2 of postponed or canceled projects continued in Q3, particularly in Software and Embedded, putting pressure on the service area’s profitability. Despite the soft market and mixed topline development, group profitability clearly improved y/y from the weak comparison period, with the EBITA margin rising to 6.9%. The share of AI-driven service solutions continued to grow, reaching 5% and contributing positively to profitability in Technical Communication and Data.
Market demand and outlook weigh on guidance
After the guidance revision ahead of Q3, Etteplan now expects 2025 revenue of EUR 355–370m and EBIT of EUR 17–20m. Our estimates prior to the profit warning were already at the lower end of the guidance, and we have only made minor adjustments to reflect the weakened operating environment. We now model net sales of EUR 362.9m and EBIT of EUR 18.5m. For Q4, we expect continued growth for Engineering Solutions driven by acquisitions, while Software and Embedded is estimated to continue its double-digit decline. For Technical Communication and Data, we anticipate continued positive momentum and modest organic growth. We have also slightly reduced our 2026 estimates due to the weaker demand outlook and uncertainty around market recovery.
ACCUMULATE with a TP of EUR 10.5 (prev. 11.0)
We maintain our ACCUMULATE rating but lower our target price to EUR 10.5 (prev. 11.0). Following our estimate revisions, Etteplan is trading at an adjusted EV/EBITA of 12–11x based on our 2025–26E estimates, implying a neutral valuation on both relative and absolute terms. While we remain cautious in the near term given the challenging market, the company’s long-term growth potential remains intact.