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Vaisala - Entering a new era of profitable growth

We anticipate Vaisala’s profitable growth journey to take a leap in 2025 aided by acquisitions. Going forward, we see that the company has multiple drivers helping it to continue the strategy execution well in line with the updated financial targets. We retain our TP at EUR 56 and revise our recommendation to ACCUMULATE (prev. BUY) to match the updated recommendation methodology (see page 45).

 

A truly global high-end measurements company

Vaisala designs, develops, manufactures, and markets equipment, systems, and services for weather, environmental, and industrial measurements. The company is headquartered in Finland yet has customers in more than 150 countries with net sales split relatively evenly across the globe. Vaisala is the market leader in many of the niches where it operates, and the company invests ~12% of its net sales in R&D annually to ensure its technology leadership. Vaisala has built its business model around multiple megatrends that change the world and consuming behavior; climate change being perhaps the most influential. Other crucial trends, such as artificial intelligence and process optimization, resource efficiency, and well-being and health drive demand for the company’s measurement solutions.

 

Multiple profitable growth levers going forward

Vaisala introduced its updated financial targets and gave insights into its group-wide strategy and strategic priorities for the business segments in its CMD in late 2024. While the company kept its average sales growth target at 7%, it updated its profitability goal to target systematically improving EBITA %. We estimate that a gradually improving market will boost demand for the IM segment yet see the greatest mid-term potential in its traditionally lower-margin W&E segment. Key profitable growth drivers for W&E include improving profitability in its legacy business, rising renewable product sales, and expansion in SaaS/DaaS, helped by the recent acquisitions, with a goal to achieve profitability in the current strategy period. We anticipate that the mentioned drivers will continue to contribute to the company's profitable growth in 2025 after a strong finish to 2024.

 

ACCUMULATE (BUY) with a TP of EUR 56.0

Our valuation of Vaisala is based on the company’s peer group, historical valuation levels, and the fair value determined through our DCF model. Vaisala is priced at adj. EV/EBIT of 18-15x and adj. P/E of 23-20x on our estimates for 2025-2026E. After only minor changes to estimates, we retain our TP at EUR 56 and revise our recommendation to ACCUMULATE (prev. BUY).

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