Tekova - Q1 beat lifts earnings confidence; valuation remains undemanding
Tekova’s Q1 results exceeded expectations, reinforcing confidence that operating profit will land in the upper half of guidance. Combined with reduced earnings risk and an undemanding valuation, this supports an upgrade to BUY.
Strong revenue
Larger project sizes and multiple completions drove strong first-quarter revenue, which came in ~13% above our estimates and ~17% above Q1 last year. We have modestly increased our full-year forecast and now expect revenue of EUR 100m.
EBIT beat, outlook improved
Operating profit came in at EUR 2.5m, above our EUR 1.9m estimate. The beat was partly driven by one-off project-related income, with the remainder supported by stronger revenue. No self-developed projects were completed during the quarter, but several are expected to be completed in the coming quarters, supporting earnings for the full year. We raise our full-year EBIT forecast to EUR 9.0m (previously EUR 8.7m), now slightly above the midpoint of guidance (EUR 6.5–11.0m).
Visibility support re-rating
A strong order backlog, ongoing projects, and the expected completion of self-developed projects support earnings momentum for the remainder of the year. At the current share price, Tekova trades at around 8x P/E, which we view as undemanding given improved earnings visibility. Following a strong start to the year and reduced downside risk, we raise our target price to EUR 1.6 and upgrade our recommendation to BUY (previously ACCUMULATE).