Vaisala |

A global leader in enviromental and industrial measurement

Industry 2 | Finland

Financial overview

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Vaisala - W&E remains in the driver’s seat

15.02.2024 | Company update

Vaisala’s Q4 EBIT missed our estimates mainly due to weaker than expected gross margin development. With the strong order book, W&E is expected to continue to perform in 2024 while IM waits for the market to pick up in H2.

Price competition and lower volumes led to GM pressure

Vaisala’s net sales increased by 4% in Q4 to EUR 147.4m, slightly above our estimates (143.6/142.7m Evli/cons.). W&E’s growth was strong as the net sales grew 10% y/y (14% excl. FX). IM’s sales decline was slightly steeper than expected. On the flip side, the company’s profitability missed our estimates as EBIT amounted to EUR 16.3m (17.5/17.7m Evli/cons.), reflecting a margin of 11.0%. While the negative effect from spot purchases was practically non-existent for both segments as expected, price competition and lower volumes affected the gross margin more than we estimated, especially for IM.

 

W&E’s outlook brighter, while IM navigates tough market

W&E’s orders received grew 35% y/y to EUR 87.7m aided by the EUR 20m airport surface observation system order in Kuwait. IM’s orders declined 8% y/y to EUR 59.4m as the important life science market segment’s orders declined especially strongly. Vaisala estimates that its FY24 net sales will be EUR 530-570m and EBIT 63-78m. We have revised our estimate for FY24 net sales to EUR 553.7m (prev. EUR 551.8m) while for EBIT, we decreased our estimate some 6% to EUR 71.7m (prev. EUR 76.1m). The Q1 is now expected to be soft driven by continued weak IM demand, impact from implementation of ERP system and industrial actions in Finland. Revenue growth is expected to be led by W&E backed by the solid order backlog. On the other hand, we estimate that there will be some softness in the margins due to the expected sales mix for W&E. For IM, we estimate growth to pick up slightly in H2 as the comparison periods get softer, the visibility to turn around in demand remains low.

 

BUY with a TP of EUR 41

Based on our updated estimates for 2024-2025, Vaisala trades at roughly 17-15x adj. EV/EBIT, this represents a discount of 11-15% when compared to the peer group. With slightly higher peer group multiples and long-term case intact, we retain our TP at EUR 41.0 and rating at BUY.

Vaisala - Solid growth and orders, soft profitability

14.02.2024 | Earnings Flash

Vaisala’s Q4 EBIT missed our estimates at EUR 16.3m (EUR 17.5m Evli). On the other hand, W&E growth and orders were strong.

  • Q4 group result: Orders received were strong and increased by 14% y/y while order book stood at EUR 172.5m (+12%). Group net sales increased by 4% to EUR 147.4m, slightly above our estimates (143.6/142.7m Evli/cons.). As expected, W&E sales were stronger, yet the growth was still stronger than we expected. Gross margin improved to a strong level of 54.3% (53.5% Q4/22) driven by smaller impact from spot component purchases. EBIT amounted to EUR 16.3m (17.5/17.7m Evli/cons.), reflecting a margin of 11.0%. EBIT improvement was mainly driven by the gross margin development.
  • Industrial measurements (IM): Orders decreased by 8% (FX -8%) y/y and order book declined to EUR 35.2m (-16%). Net sales decreased by 4% y/y to EUR 57.6m (FX 1%), below our estimates (Evli: 58.4m). Net sales decreased very strongly in life science and were at previous year’s level in industrial instruments market segments and liquid measurements market. On the other hand, net sales in power and energy market segment grew very strongly. IM profitability was clear letdown as even though the segment had no additional costs related to component spot purchases (-4.3% Q4/22), the gross margin improved only 1% y/y due to lower volume and price pressure in China.
  • Weather and Environment (W&E): Orders received increased by 35% (FX 37%) y/y and order book was up by 22% y/y. W&E’s net sales grew by 10% (FX 14%) to EUR 89.8m, above our estimates (Evli: 85.2m). Net sales grew in all market segments, very strongly in aviation market segment and strongly in renewable energy market segment. Similarly to IM, improved gross margin due to lower amount of component spot purchases drove EBIT margin to 8.3% (2.2%).
  • Outlook 2024: Net sales EUR 530-570m and EBIT EUR 63-78m

Vaisala - Decent quarter expected in a soft market

07.02.2024 | Preview

Vaisala will report Q4 earnings on February 14th. We expect solid performance in W&E while IM continues to face challenges due to weak demand in some key verticals.

W&E driving growth and profitability, for now

Vaisala’s net sales missed our estimates slightly for Q3 while the margins were stronger than we anticipated. The margins were supported by the company’s OPEX discipline and reduced spot component purchases. The market situation has stayed relatively unchanged from Q3 as IM faces subdued demand driven by weak industrial activity globally in Q4. With slight negative adjustment to our net sales estimate for IM, we estimate revenue of EUR 58.4m for Q4/23, down 3% y/y. For W&E, we keep our net sales estimate for Q4/23 at EUR 85.2m resulting in group wide net sales of EUR 143.6m for Q4 (prev. EUR 145.1m) and for FY 2023 EUR 536.6m (prev. EUR 538.1m). We estimate EBIT of EUR 17.5m with a margin of 12.2% for Q4 and EUR 67.9m for FY 2023. The margin improvement is mainly driven by improved gross margin.

 

Market remains challenging for IM

In addition to Q4 figures, our interest lies in the comments and outlook for 2024. In the Q3 report, the company commented that markets for high-end industrial instruments and life science have somewhat declined and Vaisala doesn’t expect recovery in Q4. The Eurozone industrial confidence has not improved during Q4/23 or start of 2024, on the other hand, the Chinese industrial production showed some signs of improvement during Q4. For 2024E, we make slight changes to our estimates as we expect continued growth, albeit at a slower pace driven by W&E as we expect softness in IM volumes to continue during H1. The FX headwind is estimated to decrease as the year progresses. Profitability wise, we estimate slight improvement driven by cost discipline and no further negative effects from spot purchases expected in 2024.

 

BUY with a TP of EUR 41

Vaisala trades at roughly 17-15x adj. EV/EBIT on our 23-24E estimates. Based on 23-24E adj. EV/EBIT, the current pricing represents a discount of roughly 10-15% when compared to our peer group. Additionally, Vaisala trades at a discount to its historic multiple levels and value derived from our DCF. We retain our rating at BUY yet increase our TP to EUR 41 (prev. EUR 37).

Vaisala - Navigating through the tougher market

30.10.2023 | Company update

Vaisala delivered strong profitability amid a difficult market for Q3. Net sales fell short of our estimates, yet EBIT was robust. After minor estimate revisions, we adjust our TP to EUR 37.0 (prev. EUR 39.0) with BUY rating intact.

Solid Q3 figures despite the difficult market

Vaisala’s net sales decreased by 2% (+2% excl. FX) to EUR 130.4m, below our estimates (139.2/137.8m Evli/cons.). The sales decline was mostly driven by the IM segment and FX effects for both of the segments. Through improved gross margin and cost discipline in OPEX, the company’s EBIT improved to EUR 25.2m (EUR 22.0m Q3/22). The main driver behind the gross margin improvement was the significantly lower impact of the spot component purchases. W&E order intake was 2% lower (+2% FX) yet the backlog at the end of the period increased 7% y/y to EUR 131.5m. IM order intake decreased 14% (-8% FX) and the order backlog stood at EUR 34.3m at the end of period, down 12% y/y. Vaisala now sees that the markets for high-end industrial instruments and life science have somewhat declined and do not expect recovery this year.

 

Slower growth expected, yet margins stay firm

With the lower than anticipated sales for IM and declined outlook for some of the markets, we have taken growth estimates down for both Q4 2023 and 2024E. We also updated our growth projections for W&E, and despite the revisions, we continue to anticipate y/y growth in the fourth quarter of 2023. Moreover, we have slightly reduced our W&E growth predictions for 2024E. In terms of profitability, we upgraded our estimates for IM as the Q3 showed a quick rebound from the lower levels of Q2. With the estimate adjustments, we now expect net sales of EUR 538.1m and reported EBIT of EUR 68.9m for FY 2023. Our updated estimate is well within the guidance range as Vaisala kept its guidance for 2023 unchanged at net sales of EUR 530-560m and EBIT of EUR 65-75m.

 

BUY with a TP of EUR 37.0 (39.0)

With the slight adjustments to our estimates and lower peer group multiples, we revise our TP to EUR 37.0 (39.0) while keeping the rating at BUY. We continue to consider Vaisala as moderately valued, trading at a roughly 10% discount compared to our peer group on adj. EV/EBIT basis (23-24E).

Vaisala - Profitability improved above estimates

27.10.2023 | Earnings Flash

Vaisala posted Q3 results with net sales slightly below our expectations, yet EBIT was very strong and above our estimates driven by even stronger gross margin improvement than expected.

  • Q3 group result: Orders received decreased by 8% y/y while order book stood at EUR 165.8m (+2%). Group net sales decreased by 2% to EUR 130.4m, slightly below above our estimates (139.2/137.8m Evli/cons.). Sales decline was mostly driven by the IM segment and FX effects for both of the segments. Gross margin improved to a very strong level of 58% (54.7% Q3/22). EBIT amounted to EUR 25.2m (23.8/24.5m Evli/cons.), reflecting a margin of 19.3%. EBIT improvement was mainly driven by the gross margin development. EPS amounted to EUR 0.51 (0.50/0.52m Evli/cons.).
  • Industrial measurements (IM): Orders decreased by 14% (FX -8%) y/y and order book declined to EUR 34.3m (-12%). Net sales decreaed by 6% y/y to EUR 53.9m (FX 0%), below our estimates (Evli: 56.1m). Net sales decreased in life science and industrial instruments market segments, in liquid measurements market sales were flat. On the other hand, net sales in power and energy market segment grew very strongly. EBIT amounted to EUR 14.7m (27.3% margin) and was driven by lower amount of component spot purchases, price pressure especially in China and unfavorable product mix continued to burden the gross margin.
  • Weather and Environment (W&E): Orders received declined by 2% (FX 2%) y/y yet order book was up by 7% y/y. W&E’s net sales grew by 1% (FX 4%) to EUR 76.4m, slightly below our estimates (Evli: 83.1m). The growth was strong in road weather and automotive and renewable energy, yet aviation market segment was down. Similarly to IM, improved gross margin due to lower amount of component spot purchases drove EBIT margin to 13.7% (9.9%).

Vaisala - Expecting slower growth

20.10.2023 | Preview

Vaisala reports its Q3 earnings on 27th of October. Low industrial activity slowed down IM’s growth during Q2 which we estimate to have continued during Q3. We continue to see the valuation attractive despite the temporary market pressure.

Slight adjustments to estimates ahead of Q3

Despite the current weak market sentiment, especially on the IM side of Vaisala’s business, we expect group level net sales in Q3/23 to grow to EUR 139.2m, with y/y growth of 4.5%. In terms of profitability, we estimate group EBIT of EUR 23.8m for Q3/23 with slightly improved margins when compared to Q3/22. For W&E, we expect y/y net sales growth of 9.8% during Q3 while for IM we expect a slight net sales decrease of 2.5% y/y. For IM, we see continued gross margin pressure as a result of price competition especially in the Chinese market. In addition to gross margin pressure, we expect overall lower profitability driven by the soft net sales development. For W&E, we estimate margin improvement for Q3 y/y driven by higher volumes and continued strong gross margin development stemming from improved sales mix and lower amount of spot component purchases. Our projected net sales for 2023 are EUR 552.8m, with reported EBIT reaching EUR 66.4m, both within the guidance range that was updated ahead of the Q2 earnings release.

 

Market conditions in Q3 remained largely unchanged

Vaisala’s Q2 was two-folded as the demand continued strong for W&E side of the business while IM business area suffered from lower demand driven by slowed down industrial activity. We estimate that the development seen during Q2 has largely continued to Q3. We see no improvement in the economic data when looking at the industrial production globally, on the other hand, there has been no major negative shift when compared to Q2. W&E is different story as it has a larger proportion of public clients, reducing the business area's susceptibility to economic cycles. Hence, we anticipate continuation of strong performance.

 

BUY with a TP of EUR 39 (42)

We revise our TP slightly downwards driven by our estimate changes and lower peer group multiples. We continue to consider Vaisala moderately valued, trading at a 10-15% discount compared to our peer group on adj. EV/EBIT basis.

Vaisala - Soft market opens a spot to BUY

31.07.2023 | Company update

Vaisala had a two-folded quarter with W&E delivering solid 18% growth while IM saw a decline due to a soft market. The outlook remains strong for W&E, but IM’s markets remain uncertain which impacts the BU’s growth prospects in H2.

W&E delivered growth, IM was impacted by a weak market
Vaisala had a two-folded quarter. W&E grew nicely in orders received and net sales. Meanwhile, IM suffered from soft market demand and its orders received and net sales declined from the comparison period. In total, Vaisala’s Q2 orders received grew by 5% y/y and net sales amounted to EUR 130.8m with a y/y growth of 9%. Gross margin was a bit below the comparison period at 51.1% and was negatively impacted by the unfavorable sales mix and price competition of IM. Despite lower volumes and softer gross margin of IM, group EBIT improved to EUR 11.9m (9.1% margin). Profitability was supported by an increased share of high-profitable businesses of W&E.

Low industrial activity likely to decelerate net sales growth
While the outlook for W&E seems bright with megatrend-driven investments continuing, we foresee IM’s growth prospects in 2023 clearly weakening. A high share of W&E’s revenue is funded by public entities that tend to be less cyclical. Meanwhile, industrial activity has decreased, and uncertainty is elevated. Additional uncertainty is brought by IM’s short order book. After the Q2 result, we made no significant group-level changes to our estimates. In total, we expect Vaisala’s group to continue growth during 2023-24, but with a gentler slope than seen recently. EBIT is also seen to improve but relative profitability takes a setback compared to that of the comparison period. Eventually, the period is characterized by strong development of W&E and uncertainty considering IM.

Valuation remains attractive despite uncertainty
With no material reaction in the share price, we continue to view Vaisala as moderately valued. While Vaisala is priced with 23-24E EV/EBIT multiples of 20-16x, its peers are trading above that of the company. We view that Vaisala is benefiting from the robust underlying megatrends over time, despite temporary softness in customer demand, leading to a clear positive development in EPS. We retain our BUY rating and TP of 42.0, reflecting a moderate valuation.

Vaisala - Two-folded quarter

28.07.2023 | Earnings Flash

With preliminary figures already given, Vaisala’s Q2 result contained no big surprises. W&E grew nicely while IM suffered from a soft market. Market outlook provides decent growth to continue with elevated uncertainty in the industrial market segments.

  • Group result: Orders received grew by 5% y/y and order book was on a solid level at EUR 167.4m (+6% y/y). Net sales at EUR 130.8m, with y/y growth of 9%. The increase in net sales was driven by W&E’s growing market segments. Gross margin was a bit below the comparison period. EBIT improved but was negatively impacted by the low volumes and soft gross margin of IM. The deceleration in fixed costs growth was positive news for us. EPS amounted to EUR 0.22.
  • Industrial measurements (IM): Orders received decreased by 6% and order book was flat at EUR 37.2m. Net sales declined by 3% to EUR 52.8m, due to decrease of life science. Gross margin came in soft, driven by unfavorable sales mix and elevated price competition. EBIT amounted to EUR 6.8m with a margin of 12.9%.
  • Weather and Environment (W&E): Orders received increased by 14% and order book was on a good level at EUR 130.2m (+8% y/y). Net sales increased by 18% to EUR 78.0m. The growth was driven by renewable energy, roads and automotive as well as meteorology market segments. Gross margin came in above our expectations, with higher share of more profitable businesses. EBIT came in surprisingly strong at EUR 4.9m, 6.3% of net sales.
  • Market outlook: Vaisala expects its high-end industrial instruments and life science market segments to grow moderately. Renewable energy and roads and automotive market as well as power and energy and liquid measurements segments are anticipated to grow. The company foresees aviation market segment to be stable or grow and meteorology market segment to be stable.
  • 23 guidance intact (revised on July 17th): net sales between EUR 530-560m and EBIT between EUR 65-75m.

Vaisala - Industrial demand softening

20.07.2023 | Company update

Some of Vaisala's industrial customers have recently postponed their investment decisions which was reflected in the BU’s preliminary Q2 figures. W&E experienced better-than-expected growth and profitability during Q2. With revised guidance and milder Q2, we cut our 23-24E EBIT estimates by approx. 9%.

23E EBIT guidance reduced, industrial demand soft
Vaisala revised its 23E net sales guidance to a range of EUR 530-560m (prev. 530-570m) and reduced its EBIT expectations to EUR 65-75m (prev. 70-85m). Our view is that the decrease in EBIT is primarily attributed to the weakened market environment of IM. Meanwhile, the demand for W&E was strong with its recurring service sales and renewable energy showing robust growth. In the preliminary Q2 figures, the overall topline saw a 9% increase, reaching EUR 130.8 million, largely driven by W&E's remarkable 18% y/y growth. Meanwhile, IM experienced a 3% decline in revenue, facing challenges from soft demand in the markets. Q2 EBIT improved to EUR 11.9m (9.1% margin) with the help of W&E, while IM’s EBIT saw a significant decline due to soft sales and an unfavorable sales-mix. Preliminary Q2 figures show that pressures in fixed costs have eased, and W&E’s 23E EBIT is likely to come in above our previous expectations.

We made some estimate adjustments
In light of the new guidance and preliminary Q2 figures, we adjusted our group estimates downwards. Our 23-24E EBIT estimates saw a significant downgrade of approximately 9%, primarily attributed to the weaker-than-expected performance of IM. However, the decline is partly offset by revisions made to W&E’s estimates. Our 23E EBIT estimate now stands at EUR 66.2 million, which nears the lower end of the company's new guidance range. We foresee that achieving the EBIT target of 15% in 2024 is likely to become even more challenging due to the softness of the industrial market.

Valuation favorable
We value Vaisala with 23-24E EV/EBIT of 23-18x, which, with estimate revisions, implies a target price of EUR 42.0 (44.0). In our view, Vaisala's current valuation portrays a more turbulent performance outlook than we anticipate. With that, we raise our rating to BUY (HOLD), reflecting moderate valuation relative to the company’s history and its peers.

Vaisala - Lowered EBIT guidance, preliminary Q2 figures below expectations

17.07.2023 | Analyst comment

Vaisala revised its net sales guidance and reduced its EBIT expectations for 2023. Simultaneously, the company provided preliminary figures for Q2.

  • Revised guidance for 2023: net sales of EUR 530-560m (prev. 530-570m) and EBIT of EUR 65-75 (prev. 70-85m). The midpoint implies y/y growth of 6% and an EBIT margin of 12.8%.
  • Preliminary Q2 figures show growth and profitability below our expectations: net sales of EUR 130.8m (Evli: 135.6m) and EBIT of EUR 11.9m (Evli: 14.1m).
  • IM’s orders received declined by 6% y/y, attributed to delayed investments among industrial customers. Meanwhile, W&E’s orders received saw a robust increase of 14% due to strong customer demand. Overall, Vaisala’s Q2 orders received grew 5% to EUR 129.3m.
  • Vaisala’s Q2 net sales grew by 9% to EUR 130.8m with W&E’s y/y growth of 18%, attributed to strong demand in roads and automotive and renewable energy segments as well as in subscription sales. Meanwhile, IM saw a 3% decline due to soft customer demand.
  • Group’s Q2 gross margin amounted to 55.1% which was almost in line with the comparison period. The gross margin was negatively impacted by price competition and unfavorable sales-mix in IM, and positively impacted by increased product margins of W&E. The negative impact of spot-components decreased during the quarter, by having no large impact on the gross margin.
  • With a softer gross margin, soft sales, and elevated fixed costs, IM’s EBIT saw a significant decrease to EUR 6.8m (12.9% margin). Conversely, W&E’s Q2 EBIT saw a notable increase, amounting to EUR 4.9m (6.4% margin). Overall, group EBIT improved by 15% to EUR 11.9m in Q2.
  • Vaisala reports its official Q2 results on Friday, July 28th. We update our estimates in the coming days before the company’s Q2 report.

Vaisala - Time to ramp up scalability

12.06.2023 | Company report

Vaisala’s recent growth has been supported by strong underlying demand and the alleviation of the pandemic's impact. As economic conditions have become more challenging, the company now has an opportunity to confirm its competitiveness and demonstrate the sustainability of its growth. Furthermore, the projected scalability should be unleashed from 2024 onwards.

Vaisala focuses on high-end measurements
Vaisala strategically targets niche segments within the global high-end measurements markets. The company focuses exclusively on providing solutions that deliver substantial value-add, thereby enhancing its pricing position and customer loyalty. Vaisala places great emphasis on R&D, considering it as a vital component of its growth. With an annual R&D investment of approximately 12% of net sales, Vaisala aims to ensure long-term growth and maintain its competitive edge. The company's steadfast commitment to R&D has yielded double-digit growth and an expansion of market share in recent years in our view.

Strategy has proceeded as expected
Vaisala updated its well-succeeded strategy in 2021 to better reflect the core of its business, vision, and megatrends applying to its industry. Simultaneously, the company elevated its growth and profitability targets. Vaisala has made significant progress in achieving its growth targets, although there is still work to be done to reach the EBIT margin target of 15%. Currently, the company is making substantial investments in its digital services and other growing business segments. Our view is that these segments will serve as the primary growth catalysts in the coming years, while the flagship businesses, particularly in W&E, are expected to develop moderately.

Figures seen to improve, valuation at a neutral level
We foresee a robust growth trajectory for Vaisala, with a projected CAGR of 7.4% (2022-25). The expected EPS growth is even more impressive, with a growth rate of 17.7%. We find Vaisala’s current valuation to be relatively neutral, as it’s trading in alignment with its historical and peer median multiples. With the recent upward trend in the share price, we downgrade our rating to HOLD (BUY). We reiterate our TP of EUR 44.0, with our estimates relatively intact. 

Vaisala - Margin expansion to be seen in H2

08.05.2023 | Company update

Vaisala delivered strong topline and solid order growth in Q1. Despite soft Q1 EBIT, we foresee the profitability improving towards year-end. We retain BUY rating and TP of EUR 44.0.

Delivered growth beyond expectations
Vaisala delivered strong Q1 growth both in orders and net sales. Group net sales grew by 11% y/y to EUR 131.8m. EBIT came in slightly soft at EUR 13.3m (10.1% margin). Growth was driven by each IM’s main segments while W&E performed well in continuing services, i.e., road weather and automotive, as well as in renewable energy. EBIT was impacted by flat gross margin and significantly increased fixed costs, which were driven by investments in sales, marketing, R&D and IT-systems. Vaisala’s strategic area of X-Weather posted strong double-digit growth. In our view, X-Weather has a significant potential to drive W&E's EBIT margin expansion due to its scalable business model. However, the margin impact may take a few years as we currently estimate X-Weather being yet unprofitable due to strong investments in growth.

EBIT should improve towards year-end
During 2022-23, according to its strategy, Vaisala has allocated capital in internal capabilities to ensure growth for the company’s future. Such investments have however been more extensive than we previously expected, which is seen in Q1 EBIT coming in below our expectations. Since the majority of the increased fixed costs are expected to be permanent, scalability is likely to kick in more extensively by 2024. Although Q1 EBIT was a bit soft, the company reiterating its guidance for 2023 indicates improving margins towards the year-end. Moreover, Vaisala’s target is to reach an EBIT margin of 15% by the end of 2025, which we foresee achievable, although expect further evidence on scale.

Still some room for an upside
With our estimates relatively intact, Vaisala continues to trade below its peers. In our view, the company should be priced at least in line with its peer group, considering its presence in defensively growing markets, technology leadership and EBIT improvement. We retain our BUY rating and TP of EUR 44.0.

Vaisala - Strong growth and good order flow

05.05.2023 | Earnings Flash

Vaisala posted strong Q1 net sales above our expectations. EBIT fell clearly short of our estimates. Guidance provides improving EBIT and sales growth.

  • Q1 group result: Orders received grew by 11% y/y while order book stood at EUR 163.7m (+12%). Group net sales grew by 11% to EUR 131.8m, a bit above our estimates (129.1/127.6m Evli/cons.). Growth was mostly driven by IM while W&E grew by mid-single-digit. Gross margin was approx. flat y/y, while it improved q/q. Profitability was weak and fell short of our expectations. EBIT amounted to EUR 13.3m (17.2/17.9m Evli/cons.), reflecting a margin of 10.1%. EBIT was impacted by elevated fixed costs. EPS amounted to EUR 0.27 (0.37/0.39m Evli/cons.).
  • Industrial measurements (IM): Orders grew nicely by 9% (FX 10%) y/y and order book was on a strong level at EUR 38.6m (+10%). Net sales increased by 19% y/y to EUR 63m, above our estimates (Evli: 59.5m). The growth was driven by all main segments, while the growth was especially strong in industrial instruments, life science and power. EBIT amounted to EUR 15m (23.8% margin) and was negatively impacted by softer gross margin and increased fixed costs.
  • Weather and Environment (W&E): Orders received grew by 13% (FX 12%) y/y and order book was up by 13% y/y. From strong comparison period, W&E’s net sales grew by 5% (FX 4%) to EUR 68.8m, felling a bit short of our expectations (Evli: 69.6m). The growth was strong in road weather and automotive, by X-Weather increasing by 27% y/y. Gross margin improved while increased fixed costs pushed EBIT negative to EUR -1.7m.
  • Market outlook: Industrial instruments, life science, power and energy and liquid measurements to grow. Renewable energy, road weather and automotive to grow. Aviation to remain flat or grow. Meteorology to remain flat.
  • 23 guidance intact: Net sales of EUR 530-570m, mid-point implying ~7% growth. EBIT is estimated to reach EUR 70-85m, midpoint indicating a ~14% margin.

Vaisala - Upgrade to BUY

03.05.2023 | Preview

Vaisala reports its Q1 result on Friday, May 5th. Growth is foreseen, but margin improvement is yet limited with temporal pressures in fixed costs. With valuation attractive, we upgrade our rating to BUY.

Solid growth expected despite strong comparison period
Despite uncertain market, we expect Vaisala to deliver solid topline growth in Q1’23. Overall, we anticipate Vaisala’s Q1 net sales to increase by 8.7% y/y to EUR 129.1m, supported by IM’s double-digit and W&E’s mid-single-digit growth. The comparison period was strong in terms of both top- and bottomline. In particular, EBIT of W&E was robust, considering Q1 typically being its weakest quarter of the year. The comparison EBIT was supported by, for example, low usage of spot components. In addition, long-term investments made during 2022 were not visible in Q1’22 figures yet. Therefore, we expect Q1’23 group EBIT to decline by some 2% y/y to EUR 17.2m (13.3% margin). We however foresee IM’s Q1 EBIT improving in line with its solid topline growth.

Main focus on orders and comments on the future
Vaisala’s Q4’22 order book was strong, providing a good growth base for H1. Our interest in the Q1 report is on the order development and comments on the demand during uncertain market. In late April, Vaisala announced that it will report the S/DaaS revenue separately to increase visibility into its continuing services business of X-Weather. In 2022, X-Weather’s net sales amounted to EUR 28.4m and, according to our assessment, the segment grew by some 25-35% y/y. In our view, such reporting allows investors to measure the value of Vaisala’s growth. Based on our estimates, X-Weather could potentially generate gross margin around 80% which in the future has a significant potential to improve W&E’s profitability. 

Attractive valuation ahead of Q1 result
Given the 10% decline in Vaisala's share price since our last update, we find the current valuation quite attractive, considering Vaisala's high exposure to growing niche markets. Additionally, earnings are expected to grow with the conclusion of Vaisala's efficiency reinforcement programs during 2023-24. With our estimates intact, we reiterate a TP of EUR 44.0. Our TP provides a decent premium to the current share price, and therefore, we upgrade our rating to BUY (HOLD) ahead of the Q1 result.

Vaisala - Underlying demand continues strong

17.02.2023 | Company update

Vaisala delivered strong topline growth in Q4. Orders received and order book increased by double-digits which provides a firm foundation for 2023. The company guides solid growth and clear EBIT improvement for 2023. With adjusted estimates, we raise our TP to EUR 44.0 (41.0). Our rating remains at HOLD, reflecting a neutral valuation.

Topline came in above expectations
In Q4, Vaisala grew by 13% (FX adjusted 8%) y/y to EUR 141.6m. The growth was supported by IM’s all segments and W&E’s aviation and meteorology. Spot component purchases continued, but the group gross margin remained flat. With relatively high growth in fixed costs, EBIT fell short of expectations. Q4 EBIT amounted to EUR 12.6m, reflecting a margin of 8.9%. Vaisala expects the component availability to neutralize during H1’23, and there have emerged signs of improvements already. In our view, this should result in an improved gross margin from H2’23 onwards. For 2022, the BoD proposes a DPS of 0.72.

The hot market supports demand also during 2023-24
Underlying megatrends provide continuity for Vaisala’s growth story. In addition, the company has made the right decisions during the past few years in our view, which has resulted in an expansion of market share. For example, investments in digital and renewable businesses have boosted W&E’s topline and we foresee that earlier-known steadily growing and somewhat cyclical business becomes more resilient to economic fluctuation. Moreover, with higher product margins, we see some room for profitability improvement. In addition, the company never halted R&D investments during the hardest times of COVID which enhanced Vaisala’s technology leadership position in our view. Vaisala has also benefitted from pent-up demand due to the pandemic which however likely fades away. In other words, achieving annual double-digit growth becomes even harder. We however see Vaisala as an attractive investment case with coming scalability providing EPS growth.

HOLD with a target price of EUR 44.0
With estimate revisions made, our 23E EBIT saw a 5% increase. Vaisala trades approx. in line with its peers. We retain the HOLD rating and adjust TP to EUR 44.0 (41.0), reflecting increased 23-24E estimates. 

Vaisala - Net sales came in strong, EBIT below expectations

16.02.2023 | Earnings Flash

Vaisala posted Q4 net sales roughly in line with our estimates. Orders continued in a trend of growth. EBIT however came in below our expectations with higher fixed costs. Guidance implies growth to continue also in 2023.

  • Group result: Order received continued in a growing trend with y/y increase of 17%. Order book was strong at EUR 181.5m, but declined q/q. Driven by both businesses, net sales topped our estimates, by increasing by 13% to EUR 141.6m (140.0/139.0m Evli/cons.). Gross margin remained flat. With volumes high, EBIT also improved to EUR 12.6m, but fell short of our and cons. estimates (15.2/18.3m Evli/cons.). Profitability was harmed by higher fixed costs. EBIT margin was 8.9% (Q4’21: 9.5%). EPS amounted to EUR 0.25 (0.3/0.42 Evli/cons.).
  • Industrial measurements (IM): Orders received increased by 11%. Order book was yet again record high, at EUR 41.8m. 27% y/y growth in order book was supported by good sales in industrial instruments, life science, and power. Net sales amounted to EUR 60.2m (Evli: 61.4m), representing y/y growth of 20%. Growth was good in all market segments. Q4 EBIT improved and amounted to EUR 10.8m (Evli: 12.6m), reflecting a margin of 17.9%.
  • Weather and Environment (W&E): Orders received grew strongly by 24%. Order book was also strong, at EUR 139.6m, but below Q3’22. 10% y/y change in order book was driven by renewable energy and road weather. Net sales amounted to EUR 81.3m (Evli: 78.6m) and grew by 9% y/y. EBIT amounted to EUR 1.8m (Evli: 2.7m) and was affected by higher fixed costs. EBIT margin was 2.2%.
  • 22 DPS: The BoD proposes EUR 0.72 (0.7/0.71 Evli/cons.) dividend per share for FY’22 with a payout rate of ~60%.
  • Market outlook: Industrial instruments, life science, power and energy and liquid measurements to grow. Renewable energy, road weather and automotive to grow. Aviation to remain flat or grow. Meteorology to remain flat.
  • 23 guidance: Net sales of EUR 530-570m, mid-point implying ~7% growth. EBIT is estimated to reach EUR 70-85m, mid-point indicating a ~14% margin.

Vaisala - Foreseeing a firm end for the year

14.02.2023 | Preview

Vaisala reports its Q4 result on Thursday, 16th of Feb. We expect the company to post double-digit growth and EBIT above the comparison period. With W&E estimate upgrades, we adjust our TP to EUR 41.0 (40.0) and retain HOLD-rating.

Expecting strong Q4 
Vaisala guides topline between EUR 500-520m and EBIT between EUR 62-72m for 2022. We expect Vaisala to enjoy a strong end for the year 2022. In our estimates, Vaisala faces a 12% growth by its Q4 topline amounting to EUR 140.0m. We expect W&E to experience a 5% y/y growth in Q4. On the other hand, in Q4, we anticipate IM to record a 23% y/y increase. Even though fixed costs face pressures through front-loaded investments and material costs increase with component shortage, we yet foresee Q4 EBIT improving to EUR 15.2m (10.9% margin). In total, we expect Vaisala’s topline to land a bit above and EBIT a bit below the mid-point of the guidance. With 22E EPS amounting to EUR 1.30, we estimate the BoD to propose a DPS of EUR 0.70.

Outlook as a main interest
According to PM indices, US and Euro Area manufacturing might face declines in the coming months. However, a large recession in Europe seems much unlike with energy shortage resolved. Furthermore, Vaisala’s positioning provides some protection against the slowing economy with investments in renewable energy. For now, the record high order book provides some foundation for growth in H1’23, but the visibility into H2 is yet somewhat foggy. Vaisala has generally been quite conservative in giving its guidance; with the management’s 2023 outlook providing some growth, we foresee the company having good trust/visibility for the full year. Moreover, component availability is set to improve which should provide some lifting support for EBIT.

HOLD with a target price of EUR 41.0
We revised our W&A’s near-term estimates, reflecting a better-than-expected market outlook. With our revised estimates, Vaisala trades approx. in line with its peer group, even below by considering 2023-24 figures. With minor estimate changes, we adjust our TP to EUR 41.0 (40.0). Reflecting neutral valuation, we retain our HOLD-rating ahead of the Q4 result.

Vaisala - Update on Vaisala’s W&E business

14.11.2022 | Company update

We attended Vaisala’s investor event in its wind Lidar R&D and production facilities in Saclay, France. The information we got further strengthened our view of W&E’s long-term potential.

Profitability is currently driven by flagship businesses
Vaisala introduced its W&E business area and its strategy more in detail at its investor event in Saclay, France. W&E aims for growth through its growing and emerging businesses while the profitability is currently driven by the flagship businesses, i.e., product and project sales in meteorological and aviation markets. W&E is a clear market leader in selected niche markets in its flagship businesses but the growth opportunities in named business areas are highly restricted. Vaisala continues to selectively invest in its flagship markets, but the growth potentials lie in the rest of its businesses.

From hardware to software
While in the past Vaisala was known for its highly accurate measurement hardware, a general trend in W&E’s growing and emerging businesses is an increased share of software which nowadays drives a significant part of the value-add. With certain acquisitions made during the past, Vaisala has gained access to technologies, such as Lidars and developer tools, with which it's aiming to gain an annual double-digit topline growth. Growing businesses consist of from-distance measurements, i.e., Lidar equipment as well as air quality solution and road weather and environmental solutions. Meanwhile, in its emerging businesses (Xweather), W&E provides only subscription-based data and solution services combining hardware and software. Xweather’s profitability potential is notable given its scalable platform, but the business is still in its early stages. The presentations of W&E’s growing and emerging businesses further strengthened our impression of W&E’s future potential from both growth and profitability perspective.

Investment case unchanged for now
Although W&E’s prospects seem bright now, the uncertainty concerning economic development keeps us cautious and we remain to wait for the company’s further comments on visibility to 2023. We currently expect low single-digit growth in 23 due to strong comparison periods as well as weakening economic conditions. With valuation remaining elevated and our estimates intact, we retain our HOLD-rating and TP of EUR 40.0.

Vaisala - Well positioned for uncertain future

31.10.2022 | Company update

The strong demand for Vaisala’s solutions continued with the order received increasing by 25% in Q3. Net sales saw double-digit growth and EBIT was on a solid level. We believe Vaisala to enjoy solid growth during H2’22-H1’23 but H2’23 being somewhat gloomy.

Orderbook was yet again on a record level
Vaisala has increased its orders received for four consecutive quarters and the Q3 orderbook was on a record level. Q3 IM net sales grew by 22% y/y while the growth was stronger than expected in W&E which recorded y/y growth of 18%. In total, Q3 net sales amounted to EUR 133.3m (+20% y/y). Gross margin was hit by continued spot-component purchases which eventually amounted to 54.7%. With fixed costs elevated and gross margin weaker, relative profitability saw also a slight decline. Q3 EBIT amounted to EUR 22.0m, representing a 16.5% EBIT margin. The outlook for the near future remains bright despite the weakening economic indicators.

2023 uncertain, but megatrends support the demand
Guidance implies growth to continue in Q4. The record orderbook provides a foundation for H1’23 growth but the visibility to H2’23 is somewhat gloomy. Vaisala’s resilience to possible economic slowdown is hard to estimate but the company is exposed both for industrial investments and public spending. However, the company operates within fields in which growth is boosted by several megatrends. We consider these trends supporting the demand during uncertain times. In addition, the energy crisis in Europe will likely increase investments in renewable energy, power, and gas industries in which the company already operates.

Valuation remains elevated
We made no significant changes to our estimates. We see Vaisala developing favorably in Q4’22 and H1’23 but expect W&E to experience headwinds in H2’23. In total, we expect 23E group net sales to grow only by 2.5% but EBIT margin to further improve due to the margin impact of improved component availability. Vaisala’s 23E valuation remains somewhat elevated. We don’t see significant room for an upside in the share price, but we enjoy the ride with the high-class business of Vaisala. We retain our HOLD-rating and TP of EUR 40.0.

Vaisala - The momentum continued in Q3

28.10.2022 | Earnings Flash

Preliminary figures given with the positive profit warning, Vaisala’s Q3 result came in strong and included no large surprises. Net sales saw a double-digit growth while EBIT remained on a good level.

  • Group result: Orders received grew nicely by 25% and the orderbook was 14% higher than in the previous year. Net sales grew by 20% y/y to EUR 133.3m (133.3/133.3m Evli/cons.). The growth was driven by both Vaisala’s business units. Spot-component impact continued stronger than a year ago, and gross margin fell short that of the previous year. EBIT slightly improved and amounted to EUR 22.0m (22.0/22.0m Evli/cons.), EBIT margin of 16.5%. EPS amounted to EUR 0.44 (0.45/0.47 Evli/cons.).
  • Industrial measurements (IM): Orders received grew by 30% (FX: 21%) y/y and the orderbook was 60% higher than a year ago. Net sales increased by 22% (FX: 14%) y/y to EUR 57.6m (Evli: 59.9m). A weaker gross margin had an impact on the EBIT margin which amounted to 25.3%. Profitability was under pressure of increased material and fixed costs.
  • Weather and Environment (W&E): Orders received increased by 21% (FX: 14%) y/y and the orderbook was 6% higher than a year ago. Net sales grew by 18% (FX: 11%) y/y to EUR 75.7m slightly beating our estimates (Evli: 73.4m). Spot-component purchases weakened the gross margin, but surprisingly EBIT margin improved to 9.9% against our expectations.
  • Market outlook: High-end industrial instruments, life science, power industry, and liquid measurements are expected to grow. Meteorology and ground transportation are expected to be stable. Aviation is expected to recover towards pre-pandemic level. Renewable energy market is expected to continue to grow. The global shortage of components is expected to continue during Q4’22 causing additional material costs.
  • Guidance intact (revised on 14th Oct): Net sales of EUR 500-520m and EBIT of 62-72m.

Vaisala - Stronger H2 than expected upcoming

16.10.2022 | Company update

Vaisala upgraded its 2022 guidance and published preliminary figures for Q3’22. With no major changes made to 2023 estimates, we retain our HOLD-rating and TP of EUR 40.0 ahead of Q3 result.

Outlook even brighter than expected
Vaisala upgraded its guidance and reported preliminary figures for Q3’22. Guidance raise was expected with strong demand seen throughout the year as well as the record-high order book. In its new guidance, Vaisala expects 2022 revenue to land between EUR 500-520m (prev. 465-495m) and EBIT to amount to EUR 62-72m (55-70m). Mid-point of the guidance implies y/y growth of 16% and an EBIT margin of 13%. Q3 received orders worth EUR 137.2m implies the demand continuing strong also in Q4 and possibly in Q1’23.

Strong H2 upcoming
According to the preliminary figures, Vaisala had a successful Q3 in terms of both sales and profitability considering the current market environment. Q3 net sales grew by ~20% y/y to EUR 133.3m (Evli estimate: 119.2m) and EBIT amounted to EUR 22.0m (Evli estimate: 19.6m). Q3 EBIT margin of 16.5% was approx. in line with our expectations. In our estimates, both BUs delivered strong growth in Q3, but the magnitude was more prominent in industrial measurements.

Estimating the growth to slow down in 2023
With upgraded guidance, we slightly adjusted our short-term estimates upwards. Our 2022 net sales estimate amounts to EUR 512.6m (17.1% y/y growth) and the EBIT estimate lands at EUR 65.1m (12.7% margin). We expect elevated cost pressures to restrict profitability somewhat. Only minor adjustments were made to 2023 estimates: we expect Vaisala to see more restrained growth with weaker macroeconomic conditions decreasing the investment activity. We expect Vaisala to show solid growth in H1’23 but slope to reverse in H2’23 due to a strong comparison period and economic uncertainty. In our view, valuation still stretches somewhat providing no large upside potential. We retain our HOLD-rating and target price of EUR 40.0 ahead of the Q3 result.

Vaisala - Cutting-edge quality with high price tag

09.09.2022 | Company report

Vaisala’s journey has developed well and with its revised strategy the company continues to seek scalable growth within high-end measurement solutions. We find Vaisala’s valuation stretched but a solid expected 14% annual EPS growth is in favor of holding the stock.

Global player in value-adding high-end measurements
Vaisala operates in niche segments of weather, environmental and industrial measurements. The company focuses high value-adding processes and delivers mostly customized solutions. The company emphasizes its R&D activities with annual investments of 13% of net sales on average. We see Vaisala having solid competitive advantages, such as science-based technology leadership, elevated knowledge in high-mix/low-volume operations, a broad product portfolio, and fast and reliable delivery. Moreover, bolt-on acquisitions have boosted the company’s market share and provided new growth opportunities in new market areas.

Continuity with the revised strategy
Vaisala updated its well-succeeded strategy in 2021 to better reflect the core of its business, vision, and megatrends applying to its industry. The company highlights its product and technology leadership, deep customer understanding and application know-how, scalability, and engaged and talented personnel in its current strategy. In our view, the execution of the company’s strategy has started well. Vaisala has grown quite profitably in 2021 and 22, and in early 2022, the company acquired US-based SaaS company AerisWeather to increase its technological capabilities and scalable digital business.

Uncertain market environment forms some gray clouds
We see the current market environment as quite uncertain and with slowing GDP growth and industrial activity, we revised our 2023-24 estimates slightly downwards. The company’s valuation is quite stretched, and valuation multiples have no room for any upside in our view. With our revised estimates and Vaisala’s elevated valuation, we lower our TP to EUR 40.0 (prev. 43.0) and retain HOLD-rating.

Vaisala - Profitability under short-term pressure

25.07.2022 | Company update

Despite robust growth shown in Q2, Vaisala’s EBIT was a bit softer driven by increased cost pressures. We expect the demand for Vaisala’s products to continue strong while we foresee some short-term pressures on margins. We retain our HOLD-rating and adjust TP to EUR 43.0 (45.0).

IM driving group topline growth, EBIT bit softish
Vaisala’s net sales grew nicely, by 10% to EUR 120.5m. The growth was mainly driven by the IM business unit (+24% y/y) while W&E’s revenue was approx. flat y/y. Vaisala managed to hold on to its margins and the group gross margin was on a solid level at 52.3%. The company continued its investments in its future growth and operative costs increased according to its plans. To our understanding, part of increased costs is short-term that will scale eventually after the IT-system update has been complete. EBIT decreased by 5% y/y, and fell short of our expectations, to EUR 10.3m (8.6% margin).

Guidance reiterated, some uncertainty ahead
Vaisala reiterated its FY’22 guidance; net sales between EUR 465-495 and EBIT between EUR 55-70m. With IM’s market demand continuing strong and W&E’s order book being all-time-high, we consider the company achieving its guidance easily. However, with the COVID-19 situation in Asia continuing, the war in Ukraine not ending, and the low visibility of component availability, H2 includes some uncertainties that might affect the company’s performance. We slightly adjusted our estimates; 2022 net sales estimate of EUR 491.1m nears the upper bound of the guidance range while with cost pressures being elevated, our EBIT estimate of EUR 58.2 is below the mid-point of the guidance range.

HOLD with a target price of EUR 43.0 (45.0)
We made only minor upward adjustments to our topline estimates while we adjusted our short-term EBIT estimates downwards driven by increased costs pressures stemming mainly from the company’s increased investments in its future growth. Vaisala continues to trade above its peer group, with approx. 40% premium. We adjust our TP to EUR 43.0 (45.0) and retain HOLD-rating.

Vaisala - Strong demand, EBIT below expectations

22.07.2022 | Earnings Flash

Vaisala’s Q2 EBIT fell short of our and consensus expectations. Q2 received orders came in with y/y growth of 10% and the order book was on a record-high level. Group revenue grew by 10% y/y.

  • Group result: Q2 orders received grew nicely to EUR 131.9m (+10% y/y) and the order book amounted to EUR 182.9m (+11% y/y). Net sales grew by 10% y/y to EUR 120.5m, being slightly above our expectations (EUR 118.1m/118.1m Evli/cons.). With smart pricing decisions and a favorable sales mix, the gross margin was flat y/y despite continued spot component purchases. Fixed costs increased by 19% and EBIT came in below our expectations at EUR 10.3m (EUR 12.5m/14.6m Evli/cons.), reflecting an EBIT margin of 8.6%. EPS amounted to EUR 0.18 (EUR 0.26/0.32 Evli/cons.).
  • Industrial measurements (IM): Driven by industrial instruments, life science, and power, IM’s orders saw a strong y/y increase, amounting to EUR 56.2m. Order book was 43% higher than a year ago, amounting to EUR 37.2m. Driven by industrial instruments, life science, and power, net sales amounted to EUR 54.7m (Evli: EUR 49.8m), reflecting y/y growth of 24%. EBIT improved y/y and amounted to EUR 11.5 (Evli: EUR 10.8m), reflecting an EBIT margin of 21%.
  • Weather & Environment (W&E): W&E’s quarter was solid with its orders received amounting to EUR 75.7m and order book accounting to 145.6m, reflecting y/y growth of 4%. Net sales increased by 1% (constant currencies -3%) y/y to EUR 65.9m (Evli: EUR 68.3m). Growth was good in aviation while road weather and renewable energy were flat. With a softer gross margin and increased fixed costs, W&E’s EBIT fell below zero to EUR -1.1m (Evli: EUR 2.2m), implying an EBIT margin of -1.6%.
  • 2022 guidance intact: expecting net sales between EUR 465-495m and EBIT between EUR 55-70m.
  • Market outlook: IM’s markets are expected to continue their growth while W&E’s markets are estimated to be rather stable (renewable energy is expected to grow).

Vaisala - Solid quarter incoming

19.07.2022 | Preview

Vaisala reports its Q2’22 result on Friday, 22nd of July. With its record high order book and solid outlook, we expect Vaisala to continue its robust revenue growth in Q2.

Expecting solid growth to continue
Vaisala’s Q1’22 included some positive seasonality and revenue was on a great level although Q1 has been historically the quietest quarter. We expect Q2’22 to contain less seasonality and revenue amount to EUR 118.1m, reflecting y/y growth of 7.9%. Revenue growth is driven by solid order book of W&E and strong sales development of IM as well as Vaisala’s delivery reliability during uncertain times. Our IM’s Q2 revenue estimate amounts to EUR 49.8m (+12.9% y/y) while W&E’s revenue estimate lands at EUR 68.3m (+4.4% y/y). So far, the company has been able to deliver all its orders without delays despite issues in its supply chain. We remain to wait for the news of the company’s order book development and management’s comments on the market environment as there have been some signs of slowdowns in the global industrial activity.


Some supply chain disruptions might affect margins
With the lack of crucial components, the company has sourced components from spot markets which have increased material costs during recent quarters. So far, robust topline growth and sales mix have offset the spot component impact on profitability and Q1 EBIT was surprisingly high. However, the company’s management pointed out that it’s increasingly difficult to purchase spot components. With the revenue growth, we expect Q2 EBIT to also improve y/y to EUR 12.5m but the weaker gross margin to restrict the EBIT margin development to 10.6%. We foresee some increases in the OPEX development y/y. The uncertainty lies in the gross margin development that in turn is associated with the level of spot component purchases and sales mix, and therefore our EBIT estimate include some uncertainty.


Estimates intact, valuation elevated ahead of Q2
We have made no changes to our estimates ahead of Q2. Like before, the company’s valuation remains quite elevated which is in our view justified, given Vaisala’s technology leadership and delivery reliability, but not providing a reason for a rating upgrade. We retain our HOLD-rating and TP of EUR 45.0.

Vaisala - Performance on track

30.04.2022 | Company update

The underlying demand for Vaisala’s applications continued strong. With the robust start of 2022, we upgraded our estimates. We retain our HOLD rating and adjust TP to EUR 45.0 (41.0).

Revenue growth scaled nicely
With the strong Q4’21 order book, Vaisala’s Q1 topline topped our expectations by growing by 29% y/y to EUR 118.8m (Evli: 108.6m). The growth was driven by IM’s industrial instruments and life science as well as W&E’s renewable energy and meteorology. While aviation saw the demand and orders growing, its Q1 sales yet declined y/y. With improved gross margin, revenue growth scaled nicely and EBIT over doubled from the comparison period. Group EBIT amounted to EUR 17.5m (14.8% margin).

W&E’s aviation took a big step in orders received
Vaisala’s future seems bright as the order book broke another record at EUR 168.5m. Aviation took a big step in recovery towards the pre-pandemic level in terms of orders received. We expect aviation to be one of the revenue growth drivers of W&E during the next quarters. Strong order development continued also in renewable energy, industrial instruments, and life science. Vaisala, once again, managed to deliver all its orders and IM succeed in capturing market share with its delivery reliability. In Q1, freshly acquired SaaS company AerisWeather contributed Vaisala’s topline by EUR 0.6m and EBIT by some EUR 0.1m. The acquisition supports execution of W&E’s strategy to drive growth in DaaS and SaaS recurring revenue businesses.

Low visibility of component availability continues
The component shortage had an impact on Vaisala’s Q1 gross margin of which impact was eventually offset by revenue scalability. Gross margin impact was smaller than in previous quarters, less than 1%-p. However, in Q1, the company made a commitment on spot component purchases, most of which will be realized later. In our understanding, the gross margin impact might be more visible during the next quarters. In addition, COVID-19 lockdowns in China might cause some extra constraints in Vaisala’s supply chains, resulting in postponed product deliveries or forcing the company to place additional spot-component purchases.

HOLD with a target price of EUR 45.0 (41.0)
Vaisala held its guidance intact, and with the same performance continuing, we find the guidance quite cautious. However, the market possesses an increasing amount of uncertainty. We have revised our near-term estimates upwards based on the strong Q1 result and record-level order book. Now, we expect 22E revenue to land near the upper bound of the guidance, at EUR 490.4m (+12% y/y). Revenue growth is driven by both business units: we expect IM to grow by 17.7% y/y and W&E to grow by 7.9% y/y in 2022. Our 22E EBIT estimate amounts to EUR 64.5m (13.1% margin). While the Q1 growth pace was rapid, in Q2 we expect the slope of revenue growth to smoothen. On a group level, we expect the topline to grow by 7.9% y/y to EUR 118.1m. In our understanding, Q1 included some seasonality, and hence we expect Q2 revenue to be approx. flat q/q, while in previous years, Q1 has been the calmest quarter, especially in W&E. We expect the gross margin to be a bit softer than in the previous year, but scalability to improve the Q2 profitability y/y to EBIT of EUR 12.5m (10.6% margin). With our upgraded estimates, Vaisala (22E EV/EBITDA ~18x) is still trading with a premium to its peers (22E EV/EBITDA ~16x). We find the premium justified but still remind that valuation stretches. We retain our HOLD rating and raise our TP to EUR 45.0 (41.0).

Vaisala - Excellent start for the year 2022

29.04.2022 | Earnings Flash

Vaisala’s Q1 result topped our expectations clearly. Both BUs saw double-digit growth and solid order intake indicates the growth to continue.

•    Group results: Orders received were EUR 125m (18% y/y) and the order book totaled EUR 168.5m (8% y/y). Net sales grew by 29% y/y to EUR 118.8m (108.6m/104.5m Evli/cons.), driven by both BUs. Growth scaled nicely, and EBIT amounted to EUR 17.5m (9.6m/10.1m Evli/cons.), implying a 14.8% margin. 
•    Industrial Measurements (IM): Orders received increased by 19% to EUR 54.7m while the order book stood at EUR 35.1m (41% y/y). Order intake was strong in industrial instruments and life science. IM saw a 34% y/y growth, with net sales totaling EUR 53.1m (Evli: 49.1m). The topline growth was driven by all IM’s segments. Operating profit was EUR 14.6m, 27.5% of net sales. Increased fixed costs affected EBIT negatively.
•    Weather & Environment (W&E): Orders received increased by 17% y/y to EUR 70.3m. The order book was strong and grew by 2% y/y to EUR 133.4m. Order intake grew in renewable energy and aviation while ground transportation and meteorology decreased y/y. W&E delivered very strong growth of 26% y/y in Q1, net sales totaling EUR 65.7m, beating our estimates (Evli: 59.5m). Supported by ~50% gross margin EBIT amounted to EUR 2.9m, implying a 4.4% margin.
•    2022 guidance unchanged: Net sales between EUR 465–495m and EBIT between EUR 55–70m.
•    Market outlook: Markets for high-end industrial instruments, life science, power industry, and liquid measurements are expected to continue to grow while meteorology and ground transportation are expected to be stable. Aviation market is expected to recover towards pre-pandemic level. Renewable energy market is expected to continue to grow.

Vaisala - Expecting a solid quarter

26.04.2022 | Preview

Vaisala reports its Q1 result on Friday, April 29th. We expect growth to continue, but low component availability to restrict profitability improvement. With our estimates intact, we retain our HOLD rating and TP of 41.0.

Vaisala faces strong demand in Q1
Vaisala reported strong order book in its Q4’21 financial bulletin. W&E’s order book amounted to EUR 127m while IM’s order book was on a record level at EUR 33m. Q1 has typically been the quietest quarter for Vaisala, and we expect topline to grow by 18.1% y/y to EUR 108.6m driven by a strong demand for IM’s applications and W&E’s soft comparison period. In our estimates, W&E reports a revenue of EUR 59.5m (+14% y/y) while after successful Q1 IM achieves a topline of EUR 49.1m (+24% y/y), representing almost half of group net sales.

EBIT margin to remain flat
Despite ongoing component shortage, the company has been able to deliver all its orders so far. We expect the company to continue component purchases from spot markets and thereby material costs to stay at elevated level. However, the company has transferred some increased material costs to consumer prices in early 2022 and, hence, we expect gross and EBIT margin to remain approx. flat compared to Q1’21. Our W&E Q1 EBIT estimate lands to EUR -1.5m while we expect IM to report an EBIT of EUR 11.4m. In total, our Q1 EBIT estimate amounts to EUR 9.6m (8.8% margin).

HOLD with a target price of EUR 41.0
In our view, Vaisala’s valuation is quite elevated. Vaisala trades with 22E EV/EBITDA and EV/EBIT multiples of 17.7x and 24.1x while its peer group is valued with corresponding multiples of 16.2x and 18.3x. In short-term, we find no reason for an upside in Vaisala’s valuation, but given solid earnings growth, as a long-term investment, we find it reasonable to stay on Vaisala’s board ahead of Q1 result. With our estimates intact, we retain our HOLD rating and TP of EUR 41.0. 

Vaisala - The growth story continues

19.02.2022 | Company update

Vaisala’s Q4 revenue grew strongly, but increased costs drove EBIT below the comparison period. Underlying demand was strong and Vaisala managed to deliver all its orders. We retain our HOLD rating and adjust TP to EUR 41 (43).

Growth was strong, but increased costs tightened margins
Vaisala delivered strong Q4 figures with orders received totaling EUR 119m and order book at a record level of EUR 160m. Strong order intake was driven by IM, while W&E experience a 14% decline partly due to strong comparison figures. Group net sales grew by 17% y/y to EUR 125 driven by both BUs. IM grew by 26% y/y, driven by all its market segments. W&E experienced a 12% increase in net sales, driven by renewable energy and meteorology. Increased usage of spot-priced components decreased the gross margin to 53%. EBIT decreased by 3% y/y to EUR 11.9m, driven by lower gross margin and increased fixed costs. Q4 EBIT included one-time costs worth EUR 1.1m. EPS declined by 11% y/y to EUR 0.21. Board proposed a dividend of EUR 0.68. Despite losing some margins, Vaisala gained market share and “long-wanted” customers from its competitors with its ability to respond to the demand in a difficult environment.

We made some adjustments to our estimates
Despite the problems on the supply side, the underlying demand remains strong. We made minor adjustments to our estimates, reflecting a solid outlook, but also risks stemming from the component shortage. The order book is strong and thus we expect both BUs to grow also during 2022. We expect IM to grow by 16% y/y to EUR 209.8m in 2022, driven by all its market segments. In 2022, we estimate W&E to increase by 6.3% y/y to EUR 273.1m, mostly driven by renewable energy. 2022 group revenue amounts to EUR 482.9m, near the mid-point of the guidance. Vaisala’s management noted that some price increases have been made in Q1’22, but the visibility to component availability remains weak and we expect material costs to increase and gross margin to be a bit lower than in 2021. In our view, IM suffers less from the component shortage with its pricing power, while W&E’s gross margin falls more aggressively. Although the gross margin is a bit softer, we expect EBIT to rise to EUR 59.9m (12.4% margin), driven by scalability. IM contributes the EBIT with EUR 52.4m and W&E with EUR 9m.

HOLD with a TP of EUR 41 (43)
Vaisala’s valuation is quite stretched compared to its peers. With 22E EV/EBITDA of 19x, Vaisala trades with a ~20% premium. We, however, find a premium justified, given Vaisala’s technology leadership, increased market share, and growth outlook. Our new TP values Vaisala at 22-23E EV/EBITDA of 17.6-16.4x. With the acceptable valuation level decreased and uncertainties in component availability, we retain our HOLD rating and adjust our target price to EUR 41 (43).

Vaisala - Topline met our expectations

18.02.2022 | Earnings Flash

Vaisala’s Q4 topline was in line with our expectations, but earnings fell short due to declined margins.

  • Group results: Orders received was EUR 119.0m (+6% y/y) and order book totaled EUR 160.0m (+16% y/y). Net sales grew by 17% y/y to EUR 125m (125.5/123.5m Evli/cons.). EBIT decreased by -2.5% y/y to EUR 11.9m (16.4/16.8m Evli/cons.). Driven by soft EBIT the EPS was EUR 0.21 (0.39/0.40 Evli/cons.).
  • Industrial Measurements (IM): Orders received grew very strongly by 42% y/y to EUR 58.2m and order book was at record level EUR 32.9m (+83% y/y) after Q4. Revenue grew strongly by 26% y/y to EUR 50.1m (49.5/49.5m Evli/cons.). Revenue growth was driven by high-end industrial measurements, life science, liquid measurements, and power. More expensive components bought from spots markets (negative impact of 4%-p.) drove down the gross margin to 59.9% (prev. 63.3%).
  • Weather & Environment (W&E): Orders received declined by 14% y/y to EUR 60.8m and order book was at EUR 127.1m (+6% y/y). Net sales grew by 12% y/y to EUR 74.9m (76/74m Evli/cons.). Revenue grew in renewable energy and meteorology, while it was flat in aviation and transportation. Gross margin declined to 48.9% (prev. 51.1%) due to higher component prices (negative impact of 2%-p.).
  • 2022 guidance: Net sales between EUR 465-495m (2021: EUR 437.9m) and EBIT EUR 55-70m (2021: EUR 50.1m).
  • Dividend proposal: EUR 0.68 (0.63/0.64 Evli/cons.)
  • Market outlook: Markets for high-end industrial instruments, life science, power industry, and liquid measurements are expected to grow. Markets for meteorology and ground transportation are expected to be stable. Aviation market is expected to recover towards pre-pandemic level. Renewable energy market is expected to grow.

Vaisala - Expecting strong earnings growth

14.02.2022 | Preview

Vaisala reports its Q4 result on Friday. In Q4, we expect revenue growth to scale till bottom rows and earnings improvement of 60% y/y. We retain our HOLD-rating and TP EUR of 43.

Expecting a clear earnings improvement in Q4’21
We expect solid net sales growth of 17.4% from a weak comparison period, topline totaling EUR 125.5m vs. 123.4m cons. The growth is driven by both BUs (W&E +13.4% & IM +24.1%). We expect group adj. EBIT to improve by 29.6% y/y to EUR 18.3m (14.6% margin) vs. 16.8m cons. In our estimates, W&E contributes the EBIT with EUR 7.8m (10.3% margin) and IM with EUR 10.9m (22% margin) respectively. With the profitability improvement, we expect clear 60% EPS growth. We estimate the BoD to propose a dividend of EUR 0.63 vs. 0.64 cons.

Strategy execution continued, but component shortage disturbs topline growth in 2022
The company has successfully continued its strategy execution by its solid revenue growth in both BUs. The company also acquired software company AerisWeather to strengthen its growth in DaaS and SaaS recurring revenue businesses during Q1’22. Vaisala obtains valuable data-service and software development capabilities through the acquisition in addition to a few million recurring revenue impact. In 2022, we expect the growth pace to slow a bit down to 8.3% mainly due to uncertainties regarding component availability. Despite the supply chain issues, we expect solid 16% earnings growth in 2022.

HOLD with a target price of EUR 43
Vaisala has historically been trading with EV/EBITDA multiple around 20x. Currently, with a 21-22E EV/EBITDA of 22-19x, the company trades with a slight premium compared to its peers, but given Vaisala’s quality and lower risk profile, we find the premium justified. With our estimates intact, we retain our HOLD-rating and TP of EUR 43.

Vaisala - Will achieve its targets

29.10.2021 | Company update

Vaisala’s 3rd quarter was in our view well-executed considering issues Vaisala is facing in the supply chain. With our revised estimates, we retain our HOLD-rating and raise our target price to EUR 43.0 (42.0).

Well-executed Q3
Vaisala received a fair number of orders (EUR 109.9m, +29% growth y/y) and the order book was on a record level at EUR 164.8m (+22% growth y/y). Topline growth was strong (+19% y/y), totaling EUR 111.5m (Evli: 111.5m). Industrial instruments, life-science, and power industry segments drove the IM to grow by 35% y/y, totaling EUR 47.1m (Evli: 48.1m). W&E grew by 9% y/y to EUR 64.4m (Evli: 63.4m), driven by renewable energy and aviation. Gross margin remained flat and was on a good level at 57.7%. Vaisala’s EBIT margin weakened from 20.7% to 17.3% due to exceptional costs relating to old M&A activities and settlement payments. EBIT ultimately amounted to EUR 19.2m. In Q3, Vaisala invested EUR 12.5m in R&D (11% of net sales).

Some segments are still in recovery mode
The demand in Vaisala’s target segments is one after another brightening up, but there are still some segments stalling. W&E’s meteorology in developing countries is expected to take a longer time to recover. After crawling for a while, IM’s liquid measurements are expected to continue to recover. The good news is that aviation has given some signs of life and the segment is expected to recover gradually. There are still some uncertainties regarding component availability and the company has noted that the visibility has weakened. Vaisala expects the component shortage to last at least to H1’22. So far, Vaisala has been capable to compensate the additional costs of spot priced components by revenue scalability. However, the growth outlook is improved and therefore we have raised our Q4’21 estimates so that the FY’21 figures add up to the upper limit of the company’s guidance. We expect FY’21 revenue to grow by 15.5% y/y to EUR 438.5m and an EBIT margin of 12.5%. During 2022-23, we expect revenue to grow by 8.3% and 6.8% respectively. We estimate the company to reach an EBIT margin of 12.8% and 13.9% respectively.

HOLD with a target price of EUR 43.0 (42.0)
We made minor adjustments to our 2021-23 estimates, based on target markets’ outlook and the company’s recent performance which gives a ground for a target price revision. On our new target price and a 22E P/E multiple of 29.3x, Vaisala is trading approx. in line with its peer group. Given Vaisala’s strong performance during difficult times, technology leadership, and IM’s growth potential, we find a premium to peer group justified during less uncertain times. We raise our TP to EUR 43.0 (42.0) and retain our HOLD-rating.

Vaisala - No big surprises

28.10.2021 | Earnings Flash

Vaisala had given preliminary figures ahead of Q3 and as such contained no surprises on group level. Net sales grew by 19% y/y to EUR 111.5m and EBIT amounted to EUR 19.2m. Order received grew by 29% y/y and order book remained on a record level.

  • Group results: As expected, net sales grew by 19% y/y to EUR 111.5m vs. 111.5/111.5m Evli/cons. and EBIT amounted to EUR 19.2m (17.3% margin) vs. 19.2/19.2m Evli/cons. EPS was slightly below our expectations, EUR 0.44 vs. 0.46/0.47 Evli/cons.
  • Orders received and order book: Orders received grew by 29% y/y, totaling EUR 109.9m. Order book was on a record level and grew by 22% y/y, totaling EUR 164.8m. Aviation over doubled its orders received, while industrial measurement, life-science, and renewable energy received strong number of orders.
  • Weather & Environment (W&E): W&E grew by 9% y/y to EUR 64.4m (Evli: 63.4m). Growth was driven by renewable energy and aviation. EBIT totaled to EUR 5.3m (8.2% margin).
  • Industrial Measurements (IM): IM grew by 35% y/y to EUR 47.1 (Evli: 48.1m), driven by industrial measurement, life-science, and power industry. EBIT totaled to EUR 14.2m (30.2% margin).
  • No change in FY’21 guidance (revised on Oct 19th): net sales of EUR 425-440m and an EBIT of EUR 48-58m.
  • Market outlook: High-end industrial instruments, life science, and power industry markets is expected to continue to grow. Liquid measurements market is expected to continue to recover. Meteorology market in developed countries is expected to remain flat, while in developing countries demand is expected to continue to suffer and recovery is expected to take longer. Aviation market is expected to recover gradually. Ground transportation market is expected to be stable. Renewable energy market is expected to continue to grow.

Vaisala - Signs of stronger growth

20.10.2021 | Company update

Vaisala revised its guidance for FY 2021 and disclosed preliminary figures for Q3’21. The company is now expecting revenue of EUR 425-440m (prev. 400-420m) and an operating profit (EBIT) of EUR 48-58m (prev. 40-50m).

Strong 3rd quarter
Preliminary orders received and net sales were strong, EUR 109.9m (growth 29% y/y) and EUR 111.5m (growth 19% y/y) respectively. Preliminary EBIT was a bit weaker at EUR 19.2m (19.5m), 17.3% (20.7%) of net sales. To our understanding, the profitability was burdened by increased material costs. The company had a robust Q3 and demand for Vaisala’s offering continued strongly in both BUs, especially in Industrial Measurements. Despite the component shortage, Vaisala found solutions to most availability issues together with suppliers and by purchasing higher-priced components from the spot market.

The component shortage is expected to continue
The global shortage of components is expected to continue during the fourth quarter and the first half of next year. Vaisala estimates, that component shortages will continue to generate additional material costs during the fourth quarter of 2021. We have revised our net sales and EBIT estimates for 2021-23E to reflect the company’s strong performance and a solid outlook. We expect the company to grow by 14.5% to EUR 434.5m driven by 26.1% growth in IM, while we expect W&E to grow by 7.4% in 2021. We estimate the company to reach an EBIT margin of 12.6% in 2021. For 2022-23E we expect Vaisala to grow by 8.3% and 6.8% respectively.

TP of EUR 42 (prev. EUR 38) with HOLD-rating
On our revised FY 22 estimates, Vaisala trades at a premium compared to its peers. Vaisala has performed well during FY 21 but considering the uncertainties relating to component shortage and availability, we do not find the valuation overly stretched (premium of 27% and 9% to 2022E EV/EBIT and P/E peer median). With our raised estimates, we adjust our TP to EUR 42 (prev. EUR 38) and retain our HOLD-rating.

Vaisala - Ambitious profitable growth

23.09.2021 | Company update

In its Capital Markets Day, Vaisala presented its revised strategy and financial targets for 2021-2024. Revenue growth and EBIT-margin targets were raised to 7% (5%) and 15% (12%) respectively.

Continuity by increasing growth ambition
According to the company’s management Vaisala’s strategy has so far been successful and thus the renewed strategy saw no significant changes. What is new in the strategy, is the increased ambition to grow and scale the businesses. The company will continue investing in R&D, maintain a leading position in flagship markets, grow in growth markets and generate new business in emerging markets. The company’s management noted some factors to create synergies between BUs and scale the business such as: units using common software and hardware modules and platforms in their products, continuously developing the company’s production system, and improvement of processes, tools, and competences.

Targets are set relatively high
During 2021-2024, Vaisala aims for an average annual revenue growth rate of 7% (prev. 5%). The profitability target is to achieve a 15% EBIT-margin (prev.12%) during the strategy period. During 2015-2020 Vaisala has achieved an annual growth rate of ~3% and achieved an EBIT-margin of ~10% on average. The new target is set relatively high, which reflects a higher ambition level. The company’s management highlighted that increases in revenue will scale and improve the EBIT-margin. According to the company’s management, the target growth rate doesn’t include inorganic growth, and thus our focus is on organic performance of IM and W&E’s capabilities to generate new businesses such as renewable energy and air quality. In fact, IM has grown relatively well in past few years and there is potential in W&E’s new emerging markets and applications, such as renewed energy and Data/Software as a service (DaaS/SaaS). We see the targets to be achievable should the company continue to perform well in its flagship markets and growing and generating new growth/emerging markets.

HOLD with a TP EUR 38.0 (36.0)
We increased our estimates for FY 2022 and 23 and expect the company to grow 7.7% and 6.8% respectively. We expect the EBIT-margin to gradually improve towards the long-term target level and estimate a 13.9% EBIT-margin in FY 2023 driven by scalability and revenue growth in both business units. Vaisala’s valuation is quite stretched compared to peers. We still accept a premium to Vaisala’s valuation due to the company’s technology leadership, good market position, and increased growth and profitability outlooks. We retain our HOLD recommendation and increase our target price to EUR 38.0 (36.0).

Vaisala - Solid quarter, some uncertainty ahead

26.07.2021 | Company update

Vaisala reported its Q2 results which came with little surprises as preliminary figures had been given, although the underlying profitability did exceed expectations. We have made some upwards revisions to our estimates and adjust our target price to EUR 36.0 (35.0) with our HOLD-rating intact.

Solid growth driven by Industrial Measurements
Vaisala reported its Q2 results, which with the preliminary figures given ahead of the quarter did not come as a larger surprise. Revenue growth was at a solid 20% and the operating result also improved clearly y/y to EUR 10.9m (Q2/20: EUR 7.9m). Both BU’s posted double-digit growth figures, with IM growth at 31% and W&E at 14%. Orders received grew 25% to EUR 120.1m and the order backlog as a result was up 14% to EUR 165.3m. Vaisala updated its guidance ahead of Q2, expecting revenue of EUR 400-420m and EBIT of EUR 40-50m. Vaisala will hold its Capital Markets Day on September 21st.

Underlying profitability better than expected
We have raised our estimates slightly, now expecting revenue of EUR 418.4m (prev. EUR 409.9m) and an operating result of EUR 48.2m (prev. EUR 45.0m). Vaisala’s Q2 result included an additional of EUR 2.2m relating to an update of the valuation of contingent considerations and the underlying profitability as such was clearly better than the reported operating result figures. The availability and cost of components was highlighted as a potential concern for H2, which we have reflected also in our estimates. Should the impact turn out to be small or negligible, the current guidance would appear to be rather conservative.

HOLD with a target price of EUR 36.0 (35.0)
On our revised estimates we adjust our target price to EUR 36.0 (35.0) and retain our HOLD-rating. Vaisala’s performance in Q2 was solid, but the already stretched valuation (30.3x 2022 P/E) and uncertainty relating to component cost and availability is something to consider.

Vaisala - Solid figures across the board

23.07.2021 | Earnings Flash

Vaisala had given preliminary figures ahead of Q2 and as such contained no surprises on group level. Orders received and revenue grew well in both BU’s, but more strongly in Industrial Measurements. Faster than expected recovery from the pandemic had a positive effect on demand, in particular in APAC and Europe.

  • Group level results: Q2 net sales increased by 25% to 109.5 MEUR (pre-announced). Q2 EBIT came in at 10.9 MEUR (pre-announced), resulting in a 10.0% EBIT-margin (Q2’20: 7.9 MEUR, 8.7% EBIT-margin)
  • Gross margin was 55.3% vs. 54.5% last year.
  • Orders received were 120.1 MEUR vs. 95.9 MEUR last year. Orders received grew by 25%; 17% in W&E and 41% in IM. Order book was 165.3 MEUR vs. 145.3 MEUR in Q2’20.
  • Weather & Environment (W&E) net sales increased by 14% to 65.4 MEUR vs. 65.9 MEUR our expectation. W&E EBIT was 1.0 MEUR (1.7 MEUR Evli). W&E’s orders received grew by 17%. Orders received growth was very strong in the meteorology market segment and increased also in renewable energy and aviation market segments. Net sales grew in meteorology and renewable energy market segments, whereas net sales in ground transportation and aviation market segments decreased. Industrial Measurements (IM) net sales grew 31% to 44.1 MEUR vs. 43.6 MEUR our expectation. IM EBIT was 10.5 MEUR (9.6 MEUR Evli), resulting in a 23.7% EBIT-margin (Q2’20: 20.9%). IM order intake growth was 41%. Orders received increased very strongly in life science and industrial instruments market segments. Net sales growth was strong in industrial instruments and life science market segments, and good in power industry market segment.
  • Vaisala raised its business outlook for 2021 ahead of Q2, expecting net sales to be in the range of 400–420 MEUR and EBIT in the range of 40–50 MEUR.

Vaisala - Solid Q2 results incoming

21.07.2021 | Preview

Vaisala reports its Q2 results on July 23rd. Preliminary figures show a solid second quarter and our attention will be drawn toward the rest of the year and comments regarding the impact of component availability/costs.

Guidance upgraded pre-Q2 after solid quarter
Vaisala reports its Q2 results on July 23rd. Vaisala issued a guidance upgrade last week and posted preliminary figures for sales, operating results and orders received. The previous guidance range for 2021 net sales (EUR 380-400m) and operating result (EUR 35-45m) was raised to EUR 400-420m and EUR 40-50m respectively. The guidance upgrade appears to be driven largely by a solid second quarter. Preliminary figures show Group sales growth of 20% to EUR 109.5m in Q2 and operating result of EUR 10.9m (Q2/20: 7.9m). Vaisala’s preliminary orders received in Q2 grew by 25% to EUR 120.1m. Vaisala did not specify figures per segment but noted that pick-up in demand was reflected especially in the Industrial Measurements business area.

Minor estimate changes based on preliminary Q2 figures
We have only revised our estimates for 2021 based on the preliminary figures for Q2. Our estimates were already clearly in the upper end of the previous guidance and the impact as such is relatively small on full year figures. Our sales estimate is now at EUR 409.9m (prev. 396.9m) and operating result estimate at EUR 45.0m (44.6m), in the middle of the guidance ranges. Vaisala noted that the shortage of components has increased material and transportation costs, which will have a negative impact on operating result in H2/2021, and we will be following any comments on the potential magnitude of the impact in the upcoming earnings report.

HOLD with a target price of EUR 35.0 (33.0)
Based on the more favourable outlook we have adjusted our target price to EUR 35.0 (33.0). The current rather stretched valuation and potential headwind from component availability/cost limits upside potential. We retain our HOLD-rating.

Vaisala - A perfect storm in many ways

30.04.2021 | Company update

Vaisala’s Q1 result beat our and consensus expectations thanks to a better than expected and solid performance in both BU’s. The improved market environment and strong order book attributed to net sales growth and profitability improved thanks to higher sales and lower OPEX level due to Covid-19. We have increased our estimates for 2021-23E to reflect the expected market improvement. Based on our renewed estimates and improved outlook, we raise our target price to €33 (prev. €32), our rating is now HOLD (prev. SELL).

Strong start to the year

Vaisala’s Q1 result beat our and consensus expectations thanks to solid performance in both BU’s. Q1 net sales increased by 5% to 92 MEUR (86.5 Evli / 85.7 cons). Q1 EBIT came in at 8.1 MEUR (5.9 Evli / 5.0 cons), resulting in 8,8% EBIT-margin (Q1’20: 5.2 MEUR, 6% EBIT-margin). Orders received grew by 18% to 106.1 MEUR (Q1’20: 88.7 MEUR). As a result of strong order intake, order book was record high at 155.4 MEUR (Q1’20: 141.6 MEUR). IM continued its strong performance; net sales grew 12% to 39.7 MEUR (39.5 MEUR Evli). IM EBIT was 9.4 MEUR (8.9 MEUR Evli), resulting in 23,8% EBIT-margin (Q1’20: 21,4%). IM net sales growth was strong in life science and power industry market segments and good in industrial instruments, but net sales declined in liquid measurements. IM’s order intake growth was 22% coming from all market segments and boosted by the economic recovery in China. W&E net sales increased by 1% to 52.2 MEUR (47 MEUR Evli). W&E EBIT was -0.9 MEUR (-2.6 MEUR Evli). W&E net sales grew in renewable energy, ground transportation, and meteorology market segments, but decreased in aviation, where market is still weak due to Covid-19. W&E’s orders received grew nicely by 15%. W&E orders received increased in renewable energy and ground transportation market segments, whereas meteorology market segment was flat, and aviation decreased compared to previous year.

Outlook updated, more positive outlook upgrades likely to follow

As a result of strong start to the year, Vaisala raised the lower limits of its business outlook for 2021; net sales are expected to be between 380–400 MEUR and EBIT between of 35–45 MEUR (earlier net sales 370-400 and EBIT 30-45). The outlook update did not come as a surprise given the strong orders received and order book end of last year. We see further positive guidance improvements likely given the strong order intake and order book, improving market environment, and deliveries proceeding well.

Target price €33 (prev. €32) with HOLD rating

We have increased our net sales and EBIT estimates for 2021-23E to reflect the expected market improvement. In 2021E, we expect +4,6 net sales growth driven by +7% growth in IM, while we expect W&E growth to be around 3%. We expect EBIT of 44.6 MEUR (11,2 % margin), driven by good performance in IM. Both our net sales and EBIT estimates are at guidance upper range. For 2022-23E we expect similar net sales growth and Vaisala to achieve above 12% EBIT margins as IM continues strong and W&E’s profitability improves. On our renewed estimates, Vaisala is still trading at clear premiums compared to our peer group and we continue to see valuation stretched given Vaisala’s weaker financial performance compared to peer group. Based on our renewed estimates and improved outlook, we raise our target price to €33 (prev. €32), our rating is now HOLD (prev. SELL). Our TP values Vaisala at 22-23E EV/EBIT multiples of 22x and 21x which is above the peer group, reflecting Vaisala’s technology leadership position, strong sustainability profile, healthy dividend, and especially IM’s highly profitable growth with possibility of further add-on acquisitions.

Vaisala - Strong start to the year and outlook update

29.04.2021 | Earnings Flash

Vaisala’s Q1 result beat our and consensus expectations. Both Bu’s performed better than expected thanks to good market environment. As a result of strong start to the year, Vaisala raises lower limit of its business outlook for 2021: net sales will be in the range of 380–400 MEUR and EBIT in the range of 35–45 MEUR (earlier was net sales 370-400 and EBIT 30-45). Outlook update did not come as a surprise and our 2021e estimates were already within new guidance.

  • Group level results: Q1 net sales increased by 5% to 92 MEUR (86.5 Evli / 85.7 cons). Q1 EBIT came in at 8.1 MEUR (5.9 Evli / 5.0 cons), resulting in 8,8% EBIT-margin (Q1’20: 5.2 MEUR, 6% EBIT-margin)
  • Gross margin was 54,8% vs. 56,4% last year.
  • Orders received were 106.1 MEUR vs. 88.7 MEUR last year. Orders received grew by 18%; 15% in W&E and 22% in IM. Order book was 155.4 MEUR vs. 141.6 MEUR in Q1’20.
  • Weather & Environment (W&E) net sales increased by 1% to 52.2 MEUR vs. 47 MEUR our expectation. W&E EBIT was -0.9 MEUR (-2.6 MEUR Evli). W&E’s orders received grew by 15%. Orders received increased in renewable energy and ground transportation market segments, whereas orders received in meteorology market segment were at previous year’s level. Aviation market improvement has stalled, and orders received in this segment decreased compared to previous year.
  • Industrial Measurements (IM) net sales grew 12% to 39.7 MEUR vs. 39.5 MEUR our expectation. IM EBIT was 9.4 MEUR (8.9 MEUR Evli), resulting in 23,8% EBIT-margin (Q1’20: 21,4%). IM order intake growth was 22%. Increase in orders received was strong in all market segments. Relative growth was strongest in power industry applications, although its share of orders received was still below 10%.
  • As a result of strong start to the year, Vaisala raises lower limit of its business outlook for 2021: net sales will be in the range of 380–400 MEUR and EBIT in the range of 35–45 MEUR (earlier was net sales 370-400 and EBIT 30-45).

Vaisala - Cautious outlook

22.02.2021 | Company update

Vaisala’s Q4 missed expectations, but overall Vaisala managed to perform well in 2020 despite the pandemic affecting especially W&E. IM’s performance was once again strong, even in difficult environment. Vaisala’s guidance for 2021 was cautious, despite Vaisala seeing market starting to gradually recover and new orders picking up nicely. Based on the report, we’ve lowered our 2021-23E estimates and continue to see valuation expensive, thus we maintain our TP of 32€ and SELL rating.

Q4 orders received picked up nicely in both BU’s

Vaisala’s Q4 result missed ours and consensus expectations, but strong order intake growth for both BU’s surprised positively and order book remains at good level. Q4 net sales decreased by -10% to 106.9 MEUR (109.5 Evli /108 cons). Q4 EBIT came in at 12.2 MEUR (14 Evli / 13.6 cons), resulting in 11,4% EBIT-margin (Q4’19: 17.7 MEUR, 15% EBIT-margin). Orders received grew +8% to 111.9 MEUR vs. 103.3 MEUR last year. Orders received grew +7% in W&E and +11% in IM. Order book was 137.8 MEUR vs. 139 MEUR in Q4’19. W&E fell short of our expectations; net sales decreased by -16% to 67 MEUR vs. 73.5 MEUR our expectation. W&E EBIT was 5.2 MEUR (7.3 MEUR Evli), resulting in 7,8% EBIT-margin (Q4’19: 14,7%). After a few weaker quarters, IM continued its strong performance, beating our estimates; net sales grew 10% to 39.9 MEUR vs. 36 MEUR our expectation. IM EBIT was 8.3 MEUR (6.8 MEUR Evli), resulting in 20,8% EBIT-margin (Q4’19: 15,1%). Dividend proposal is 0.61 (0.63 Evli / 0.63 cons).

 Despite solid performance and expected market recovery, outlook remained cautious

Looking at 2020, Vaisala managed to perform well despite the pandemic affecting especially W&E and creating uncertainties regarding deliveries. IM’s performance was once again strong, even in difficult environment. While W&E 2020 net sales and EBIT declined -10% and -17,5% respectively (on high comparison figures), IM 2020 net sales and EBIT grew 1% and 22%. In addition, IM is currently seeing strong growth led by pharmaceutical customer segment which includes COVID-19 vaccine suppliers. Despite continued uncertainties due to the pandemic, Vaisala sees market gradually recovering in 2021, except for meteorology market in developing countries. Vaisala issued 2021 guidance expecting net sales between 370–400 MEUR and EBIT between 30–45 MEUR. Pre-Q4, both we and consensus 2021E expectations were above the EBIT guidance. The outlook was a disappointment, given the decent performance last year, new orders picking up, lower opex level and expected market recovery.

Maintain target price of 32 euros and SELL recommendation
 
Based on the report and new guidance, we have lowered our estimates for 2021-23E. In 2021E, we expect +1,6 net sales growth driven by +7% growth in IM, while we expect W&E growth to be slightly negative. We expect EBIT of 41 MEUR (10,6 % margin) which is above guidance mid-point, driven by good performance in IM. On our renewed estimates, Vaisala is still trading at clear premiums compared to our peer group and we continue to see valuation stretched given the weaker financial performance compared to peer group. We maintain our TP of 32€ and SELL rating due to lowered estimates and expensive valuation. Our TP values Vaisala at 21-22e EV/EBIT multiples of 28x and 22x which is still above the peer group, reflecting Vaisala’s strong sustainability profile, healthy dividend, and especially IM’s highly profitable growth with possibility of further add-on acquisitions.

Vaisala - A champion with a hefty price tag

10.02.2021 | Company report

Vaisala’s R&D leadership focused strategy and bolt-on acquisitions have paid off well during the last years. Dark clouds are currently hanging over W&E, but thanks to its strong financial position, and growing share of more profitable IM sales, we see Vaisala on track to targeted above 5% growth and above 12% EBIT margins. However, we continue seeing Vaisala’s valuation too expensive given the expected financial performance. We maintain our target price of 32€ and our SELL recommendation.

Maneuvering pass a challenging 2020

Vaisala has managed to maneuver pass the corona pandemic rather unscathed. Due to lowered operating expenses caused by the pandemic and good order book & deliveries, performance has been good in both BU’s. Currently, W&E is weighed down by the weakened outlook for aviation and lack of larger infra projects, especially in developed countries. IM on the other hand, is expected to be less affected by COVID going forward.

 Profitable growth with R&D leadership strategy

Looking at the coming years, we see Vaisala’s targeted above 5% sales growth and >12% margins achievable despite current gloomy outlook for aviation. We expect the growing share of more profitable IM sales to continue supporting Vaisala’s growth and operating margin. In 2021E-22E, we estimate Vaisala’ net sales to grow by 4.5% and 5.3%, and EBIT margins of 12.2% and 12.6% respectively. We expect W&E market to begin to gradually recover in 2021E-22E with an annual growth rate of approximately 3% and W&E’s EBIT margins to gradually improve towards 7% in 2022E. For IM, we expect 2021E-22E continued profitable growth at 7% and 9.6% annual growth rates, respectively. We expect IM’s EBIT margins to stay above 20% in 2021-22E.

 Maintain SELL as valuation is expensive

Vaisala’s share price has rallied in last few years and is currently around all time high levels. The share price rally is also visible in Vaisala’s valuation multiples, which have increased strongly since around mid-2019, resulting in a clear sustained valuation premium of 20-60% during this period. As peer group multiples have rerated as of late, Vaisala’s EV/EBIT and P/E valuation premium is now around 20-30% on our 2021-22E estimates. Despite recent surge in valuation multiples, we see valuation too expensive given Vaisala’s weaker growth rates and margins compared to our technology peer group. Thus, we maintain our target price of 32€ and our SELL recommendation. Our target price values Vaisala at 21-22e EV/EBIT multiples of 23x and 21x which is above peer group, reflecting Vaisala’s strong sustainability profile, growing dividend, and especially IM’s highly profitable growth with possibility of further add-on acquisitions.

Vaisala - Uncertainties in W&E outlook

28.10.2020 | Company update

Vaisala delivered a two-fold Q3 result. Despite W&E’s strong profitability improvement, sales and orders declined and COVID-19 continues to pose significant near-term risks. IM business remains resilient. We keep our estimates broadly unchanged and maintain TP of 32€ with SELL.

Sales mix boosted profitability, orders and sales decreased
Q3 net sales decreased by 11% to 94 MEUR mainly due to the decline in W&E’s project business. Gross margin improved to 57.7% (55.3%) and EBIT to 19.5 MEUR (16.3 MEUR), 20.7% (15.5%) of net sales. W&E’s EBIT improved to 11.1 MEUR (9.7 Evli) and IM’s was 8.6 MEUR (10.3 Evli) According to Vaisala, lower share of less-profitable project business, improved profitability of digital services in W&E and higher share of IM sales boosted margins. Operating expenses also decreased compared to previous year due to less travelling and some non-recurring positive impacts. Orders received decreased overall by 19% as W&E’s order intake was impacted by COVID-19 especially in airports segment and emerging markets. IM’s orders received increased 2% supported by strong order intake in APAC (+19%).

Our estimates broadly unchanged
Vaisala reiterated its 2020 outlook issued last week, as expected, estimating FY20 net sales to be 370-390 MEUR and EBIT to be 40-48 MEUR. Based on the report, we keep our estimates broadly unchanged. We expect 20e sales to decline 5.3% to 382.1 MEUR and EBIT to increase to 46.7 MEUR. W&E outlook is weighed by the weakened outlook for aviation and restrictions will cause delays in project deliveries. Thus, we expect W&E 20e sales to decrease by 7.3% to 242.1 MEUR and EBIT to decrease to 16.7 MEUR. We expect IM to remain relatively resilient with 20e sales down 1.7% to 140 MEUR and EBIT increasing to 30.1 MEUR. In 21e, we expect IM sales to continue growing (+7%), while W&E is expected to recover only slightly (+3%) due to uncertainties and decreased order intake.

Valuation still challenging
On our estimates, Vaisala is still trading at clear premiums compared to our peer group and we see valuation stretched given the weaker financial performance compared to peer group. Based on the report, we retain our TP of 32€ and SELL rating. Our TP values Vaisala at 21-22e EV/EBIT multiples of 22.9x and 20.7x which are above the peer group, reflecting Vaisala’s strong sustainability profile, growing dividend, and especially IM’s highly profitable growth with possibility of further add-on acquisitions.

Vaisala - Strong profitability in both segments

27.10.2020 | Earnings Flash

Vaisala’s Q3 did not provide bigger surprises as the company updated its business look for 2020 and published preliminary Q3 net sales and EBIT figures last week. Vaisala’s Q3 net sales decreased by 11% to 94.0 MEUR. Q3 reported EBIT was 19.5 MEUR.

  • Group level results: Q3 net sales decreased by 11% to 94.0 MEUR.
  • Gross margin was 57.7% vs. 55.3% last year.
  • Orders received were 85.3 MEUR vs. 105.1 MEUR last year. Orders received decreased by 19% due to weakened order intake especially in W&E’s airports markets and emerging markets. Order book was 134.6 MEUR vs. 154.4 MEUR in Q3’19.
  • Weather & Environment (W&E) net sales decreased by 14% to 59.2 MEUR vs. 59.9 MEUR our expectation. W&E EBIT was 11.1 MEUR (9.7 MEUR Evli). W&E’s orders received decreased by 29% and was impacted by decreased order intake mainly from MEA and Latin America.
  • Industrial Measurements (IM) net sales declined 3% to 34.8 MEUR vs. 34.5 MEUR our expectation. IM EBIT was 8.6 MEUR (10.3 MEUR Evli). Industrial Measurements’ order intake growth was 2% and orders received grew by 19% in APAC, while order intake in EMEA and Americas decreased partially offsetting increase in APAC.
  • Business outlook for 2020 maintained: Vaisala estimates its full-year 2020 net sales to be in the range of EUR 370–390 million and operating result (EBIT) to be in the range of EUR 40–48 million (updated on October 21st).

Vaisala - Q3 EBIT clearly better than expected

22.10.2020 | Company update

Vaisala updated yesterday its business outlook for 2020 and published preliminary net sales and operating result for Q3. With the better than expected profitability development, we raise our TP to 32€ (29), but due to continued share price rally our rating is now SELL (HOLD).

Sales expected to be 370-390 MEUR and EBIT 40-48 MEUR
Vaisala narrowed net sales estimate and increased EBIT estimate, and now expects 2020 sales to be between 370–390 MEUR and EBIT to be between 40–48 MEUR (prev. sales 370-405 MEUR and EBIT 34-46 MEUR). Vaisala also provided preliminary figures for January–September 2020. Preliminary net sales were 273 MEUR (277.2 MEUR Evli) and EBIT was 33 MEUR (25.6 MEUR Evli).

EBIT clearly better than expected despite the decline in sales
Pandemic has affected negatively especially airports customer segment and emerging markets, and W&E has been missing larger project orders. Some project deliveries have also been delayed due to restrictions related to COVID-19. IM’s industrial instruments and liquid measurements products has not met growth targets due to volatile market situation during Q2 and Q3. On the other hand, Vaisala’s profitability has developed clearly better than expected in Q3 (EBIT 19.9 MEUR vs. 12.6 MEUR Evli). According to Vaisala, W&E’s digital services and IM’s product and service businesses improved their gross margins. In addition, the decline in operating expenses caused by the prolonged pandemic, has improved EBIT more than expected.

Valuation remains stretched
Based on the update, we have cut our sales estimates and increased EBIT estimates for 2020e. We expect 2020e net sales to decline 5.2% to 382.5 MEUR and EBIT to increase to 46.6 MEUR. We have also revised EBIT estimates slightly upwards for 2021e. Despite the margin improvement, COVID-19 continues to pose significant near-term uncertainties. Vaisala’s share price rally has continued and, on our estimates, Vaisala is trading at clear premiums compared to our peer group and we see valuation stretched given the weaker financial performance compared to peer group. We look forward to hearing more about the drivers of margin development in connection with Q3 report next Tuesday. With the better than expected profitability development we raise our TP to 32€ (29), but downgrade to SELL (HOLD).

Vaisala - Eyes on the horizon

22.07.2020 | Company update

Vaisala delivered a decent Q2 result, with improved EBIT despite decrease in net sales and orders received. Vaisala maintained its 2020 guidance although market outlook is still weighed down by COVID. Although there are still short-term risks related to the pandemic, we see Vaisala coming out rather unscathed from the pandemic, and therefore we are ready to emphasize more the coming years and Vaisala’s post-COVID performance. Our estimates remain unchanged, and we continue to see Vaisala executing well but valuation is challenging. We maintain HOLD recommendation with target price of 29 euros (prev. 26).

W&E stronger than expected, while IM soft

On a whole, Vaisala’s Q2 result was broadly in line. Q2 net sales decreased -5% to 91,4 MEUR vs. 93,5 MEUR Evli and 94 MEUR consensus. Q2 EBIT improved 9,7% y/y to 7,9 MEUR (8,7% margin) vs. 8,1 MEUR our expectation (cons. 7,9 MEUR). EPS was 0.16 (0.19 Evli, 0.20 consensus). Gross margins held up nicely (54,5% vs. 54,2% last year) despite lower volumes. Orders received decreased -2% to 95,9 MEUR due to weakened order intake in IM and especially in APAC region. Overall, W&E fared slightly better than we expected with Q2 EBIT at 0,7 MEUR (0,2 MEUR Evli) and decent orders received +1% due to strong EMEA. On the other hand, IM was softer than we had expected. IM net sales declined -5% to 33,8 MEUR (37,1 MEUR Evli) and EBIT was 7,1 MEUR (7,9 MEUR Evli), due to lower net sales. IM order intake declined -8% in all regions, especially APAC. According to Vaisala, IM’s high-end humidity and high-end carbon dioxide markets were affected by COVID as customers suspended operations and delayed decision making.

2020 outlook maintained

Vaisala estimates that lost order intake during H1 was roughly 15–25 MEUR and lost net sales was in range of 5–15 MEUR. Looking forward, it’s clear that uncertainties will continue. W&E outlook is weighed by the weakened outlook for aviation and lack of larger infra projects, especially in developed countries. IM is also expected to suffer short term from COVID repercussions. Vaisala maintained its 2020 outlook it issued in April, expecting FY20 net sales of 370–405 MEUR and EBIT of 34–46 MEUR. Our estimates remain broadly unchanged after the report. We believe pulling out of COVID will help IM fare better in H2, and our 20E estimates are at midpoint of guidance. We expect 2020e net sales to decline roughly 4% to 388 MEUR and reported EBIT to decline to 39,5 MEUR. Our 2021-22E estimates remain unchanged and we continue to see Vaisala’s targeted above 5% sales growth achievable and road to >12% margins resuming after pandemic resides.

Valuation remains challenging

On our estimates, Vaisala is still trading at premiums compared to our peer group, and as noted before, we see valuation stretched given Vaisala’s weaker financial performance compared to peer group. Peer group valuation multiples have however risen, and premiums are now more acceptable. Although there are still short-term risks related to the pandemic, we see Vaisala coming out rather unscathed from the pandemic, and therefore we are ready to emphasize more the coming years and Vaisala’s post-COVID performance. We raise our target price to 29€ (prev. 26€) and maintain our HOLD recommendation. Our target price values Vaisala at 21-22e EV/EBIT multiples of 22x and 19x which is above peer group, reflecting Vaisala’s strong sustainability profile, growing dividend, and especially IM’s highly profitable growth with possibility of further add-on acquisitions.

Vaisala - Q2 broadly in line, IM softer than expected

21.07.2020 | Earnings Flash

Vaisala’s Q2 EBIT was broadly in line, but pandemic had its toll on both business areas and orders received. Vaisala’s Q2 net sales decreased 5% to 91,4 MEUR vs. 93,5 MEUR our expectation and 94 MEUR consensus. Q2 reported EBIT was 7,9 MEUR (8,7% margin) vs. our expectation of 8,1 MEUR (7,9 MEUR consensus).

  • Group level results: Q2 net sales decreased 5% to 91,4 MEUR vs. 93,5 MEUR our expectation and 94 MEUR consensus. Q2 EBIT was 7,9 MEUR (8,7% margin) vs. our expectation of 8,1 MEUR (cons. 7,9 MEUR). EPS was 0.16 (0.19 Evli, 0.20 consensus).
  • Gross margin was 54,5% vs. 54,2% last year
  • Orders received was 95,9 MEUR vs. 98 MEUR last year. Orders received decreased by -2% due to weakened order intake in Industrial Measurements and especially in APAC region. Order book was 145,3 MEUR vs. 141,6 MEUR Q1’20.
  • Weather & Environment (W&E) net sales decreased -5% (-5% excl. FX) to 57,6 MEUR vs. 56,4 MEUR our expectation. W&E EBIT was 0,7 MEUR (0,2 MEUR Evli). Order intake growth was 1% with strong orders received in EMEA offset by weaker APAC and Latin America.
  • Industrial Measurements (IM) net sales declined -5% (-5% excl. FX) to 33,8 MEUR vs. 37,1 MEUR our expectation. IM EBIT was 7,1 MEUR (7,9 MEUR Evli), due to lower net sales. Industrial Measurements order intake declined -8% in all regions, especially APAC.
  • Business outlook for 2020 maintained: Vaisala estimates that its full-year 2020 net sales will be in the range of 370–405 MEUR and EBIT will be in the range of 34–46 MEUR (updated previously on April 21st)

Vaisala - Clouds over W&E while IM keeps on rocking

29.04.2020 | Company update

Vaisala delivered a better than expected Q1 result. Overall, Vaisala is well positioned to weather the corona storm, but clouds are gathering above W&E as project business is exposed to the pandemic. Given the uncertainty to W&E’s performance in H2, we do not see short term risk/reward profile particularly attractive now. Based on our slightly raised estimates, we raise our target price to 26€ (prev. 25€), our recommendation is now HOLD (prev. SELL).

No major impact of corona in Q1
Vaisala delivered a better than expected Q1 result as corona did not have major impact on business in the quarter and delivery capabilities remained good. Q1 net sales grew 4% to 87.2 MEUR vs. 84.5 MEUR our expectation and 84.3 MEUR consensus. Q1 reported EBIT was 5.2 MEUR (6% margin) vs. our expectation of 2.1 MEUR (3.2 MEUR consensus). EBIT improvement was due to strong 3pp improvement in gross margins (56.4% vs. 53.2% Q1’19), which was attributed to projects and digital services in W&E and exceptionally high GM of 65.8% in IM. Q1 order intake decreased -21% due to lower order intake in W&E. It’s worth noting however that order intake comparison period was exceptionally good (including two large projects) and variations between quarters can be large depending on timing of projects. Order book grew +2% q/q and -6% y/y. The Ethiopian project order (13 MEUR) is not yet included in order book.

W&E business exposed while IM continues on track
Vaisala reiterated its 2020 guidance (updated on April 21st); expecting net sales of 370–405 MEUR and EBIT of 34–46 MEUR. With W&E’s current strong order book, descent order intake, and delivery capabilities remaining at current acceptable levels, we expect W&E business to perform well in H1. The effects of the corona pandemic impact more on W&E business in H2, where delays or postponements of projects become more likely if current situation is prolonged. Vaisala sees developed countries market remaining more stable while developing countries being more hit by the pandemic. IM is expected to continue growing, albeit slower than last year’s organic growth of roughly 9.5%.

Valuation stretched given weakened financial outlook in W&E
We’ve only made small adjustments to our estimates based on the report. We expect IM to continue performing well, while W&E to decline in H2 partly due the pandemic and high comparison period. We expect 2020e net sales to decline 3% to 392 MEUR and reported EBIT to decline to 39 MEUR, mainly due to the lower performance in W&E in H2. On our estimates, Vaisala is still trading at clear premiums compared to our peer group. Also, our 2020-21e PPA-adjusted EV/EBIT multiples of 22x and 19x, are ~25% above our peer group. Given the uncertainty to W&E’s performance this year, we do not see short term risk/reward profile particularly attractive now. Based on our slightly raised estimates, we raise our target price to 26€ (prev. 25€), our recommendation is now HOLD (prev. SELL). Our target price values Vaisala at 20-21e EV/EBIT multiples of 23.5x and 20x which is above peer group, reflecting Vaisala’s strong sustainability profile, growing dividend, and especially IM’s highly profitable growth with possibility of further add-on acquisitions.

Vaisala - W&E business hurting from corona

22.04.2020 | Company update

Vaisala issued yesterday a profit warning due to estimated impacts related to the coronavirus pandemic. Consequently, we’ve revised down our estimates for 2020. Despite Vaisala being a great company, we see current valuation unattractive given the weakened financial outlook. We maintain our SELL with new target price of 25 euros (prev. 29.5).

W&E’s project and services business suffering from corona
Vaisala expects delays or interruptions particularly in project and services deliveries due to the extensive restrictions imposed by governments and authorities. Demand in W&E has to some extent already weakened and Vaisala estimates that the situation will become more challenging as governments have tighter budgets, especially in emerging markets. The profit warning did not come as a complete surprise given that Vaisala’s largest segment, W&E, consists roughly 40-45% of projects and services, and the growth is very dependent on investments from emerging market governments. Vaisala does not expect demand for IM to change materially, but growth will slow down from last year (+22.2%).

New guidance broader as predicting is currently difficult
Vaisala’s now expects 2020 sales will be between 370–405 MEUR and EBIT between 34–46 MEUR (prev. sales 400–425 MEUR and EBIT 38–48 MEUR). The outlook’s range for both net sales and EBIT is wide due to high uncertainty related to the duration and impact of coronavirus pandemic as well as unknown speed of recovery. Vaisala will provide an update to its market outlook in connection with its Q1 report due next week on Tuesday 28th.

Valuation still stretched given weakened financial outlook
Based on the new outlook, we have cut our estimates for 2020e and the coming years. For 2020e, we’ve cut our sales and EBIT estimates with 8% and 20% respectively. We expect 2020e net sales to decline 3% to 390 MEUR and reported EBIT to decline to 34.9 MEUR, mainly due to lower performance in W&E. On our renewed estimates, Vaisala is still trading at clear premiums compared to our peer group, which we do not see justified given the financial performance outlook currently weighed down by W&E. We maintain our SELL with new target price of 25 euros (prev. 29.5). Our target price values Vaisala at 20e EV/EBIT multiple of 25x which is still above peer group, reflecting Vaisala’s strong sustainability profile, growing dividend, and especially IM’s highly profitable growth with possibility of further add-on acquisitions.

Vaisala - Valuation running ahead of things

13.02.2020 | Company update

Vaisala ended a solid 2019 with a good Q4 that beat expectations. The outlook for 2020 was rather cautious with current expectations already at upper range of guidance. Both acquired companies contributed significantly in last year’s growth, and we see further M&A as key to accelerate growth and maintain current valuation. Our estimates remain broadly unchanged post Q4 and thus we maintain previous TP of EUR 29.5. Due to continued share price rally our recommendation is now SELL (prev. HOLD).

A good finish to a solid year

Vaisala ended a solid 2019 with a good Q4 that beat expectations. Q4 net sales grew 9% y/y to 118.1 MEUR (118 Evli, 116 cons) and EBIT improved +27% to 17.7 MEUR (16 MEUR Evli/cons.). Dividend proposal is 0.61 (0.60 Evli/cons.). Net sales growth was driven by good level of delivery volumes thanks to record high order book during end of last year. Q4 EBIT improvement was driven by gross margin improvement of 170 bps due to net sales growth and scale benefits.

Both business areas fuelled by M&A

W&E Q4 net sales grew 5% (1% excl. FX and M&A) to 81.9 MEUR (80.0 Evli), with growth in all regions except China. W&E Q4 EBIT was 12.1 MEUR (10 Evli). W&E order intake growth was -3%, -8% growth excl. FX and M&A, due to less larger projects during Q4. IM Q4 net sales grew 18% (5% excl FX and M&A) to 36.3 MEUR (38.0 Evli) and was strong in all regions. IM Q4 EBIT was 5.5 MEUR (7.6 Evli). IM order intake grew by 19%, 8% excl. FX and M&A. Both acquired companies, i.e. Leosphere (W&E) and K-patents (IM), have been successfully integrated to Vaisala’s platform and contributed significantly in FY’19 growth. Half of IM’s FY’19 net sales growth came from K-Patents acquisition, while W&E FY’19 net sales growth excluding FX and M&A was 2%. Vaisala has indicated the possibility of further add-on acquisitions in liquid measurements area. With its platform, strong balance sheet and current valuation, Vaisala is in a good position to continue value accreditive acquisitions in our view.

2020 outlook slightly soft as expectations already in upper end

Vaisala estimates its 2020 net sales to be in the range of 400–425 MEUR and EBIT in the range of 38–48 MEUR, which practically means 0-5% growth and 9-12% EBIT margins. Given that our previous 2020 estimates, as well as consensus figures (FY’20E net sales 423M, EBIT 48.3 MEUR) were already in the upper end of the outlook, the guidance is cautious. Vaisala expects W&E market segments to be stable or somewhat grow, while industrial and liquid measurement market segments are expected to continue to grow.

Estimates unchanged, valuation is running ahead of things

Apart from a slight trim to our sales estimates, our estimates are unchanged for the coming years. With the acquired businesses integrated into Vaisala’s sales channel and continued stable to good organic momentum in both W&E and IM, we see Vaisala’s targeted above 5% sales growth achievable and road to >12% margins progressing well. The underlying main driver for growth is continued good growth in industrial business supported by further bolt-on acquisitions. As a result, we estimate IM share of Vaisala’s EBIT to grow to 66% in ‘21E (vs. 56-57% in ’17-’18), driving ~10% EBIT growth in coming years. Vaisala’s share har continued to rally, pushing new all-time highs. On our estimates, Vaisala is trading at PPA amortizations adjusted EV/EBIT multiples of 24.7x and 22.4x for ‘20E and ‘21E, a ~50% premium to our peer group median despite exhibiting lower profitability profile than our peer group. On our adjusted ‘20E P/E multiples, premium is roughly 50% as well. Despite Vaisala’s strong sustainability profile, growing dividend, and especially IM’s highly profitable growth with possibility of further add-on acquisitions, we see current valuation too stretched given our current growth and earnings estimates (which do not account for further M&A). We maintain previous TP of EUR 29.5, which values Vaisala at EV/EBIT 23.5x and 21x on ’20-21E, still at ~40% premium to our peer group. Due to continued share price rally our recommendation is now SELL (prev. HOLD).

Vaisala - Q4 result small beat, 2020 outlook signals 0-5% growth and 9-12% EBIT margins

12.02.2020 | Earnings Flash

Vaisala’s Q4 net sales grew 9% to 118.1 MEUR vs. 118 MEUR our expectation and 116 MEUR consensus. Q4 reported EBIT was 17.7 MEUR vs. our expectation of 16 MEUR (16 MEUR consensus). Dividend proposal is 0.61(0.60 Evli, 0.60 consensus).

• Group level results: Q4 net sales grew 9% to 118.1 MEUR vs. 118 MEUR our expectation and 116 MEUR consensus. Q4 EBIT was 17.7 MEUR vs. our expectation of 16 MEUR (cons. 16 MEUR). EPS was 0.41 (0.35 Evli, 0.34 consensus).

• Dividend proposal is 0.61(0.60 Evli, 0.60 consensus).

• Gross margin was 56.0 % vs. 54.3 % last year.

• Orders received was 103.3 MEUR vs. 99.1 MEUR last year. Orders received increased by 4% and growth without currency impact and acquisitions was -3%.

• Weather & Environment (W&E) net sales grew 5% (1% excl. FX and M&A) to 81.9 MEUR vs. 80.0 MEUR our expectation. EBIT was 12.1 MEUR (10 MEUR Evli). Order intake growth was -3% in Weather and Environment, -8% growth excl. FX and M&A.

• Industrial Measurements (IM) net sales grew 18% (5% excl FX and M&A) to 36.3 MEUR vs. 38.0 MEUR our expectation. EBIT was 5.5 MEUR (7.6 MEUR Evli). Industrial Measurements order intake grew by 19%, 8% excl. FX and M&A.

• Business outlook for 2020: Vaisala estimates its full-year 2020 net sales to be in the range of EUR 400–425 million and its operating result (EBIT) to be in the range of EUR 38–48 million.

Vaisala - Upgrades outlook on continued good momentum

12.12.2019 | Company update

Vaisala upgraded yesterday its 2019 outlook. The upgrade did not come as a surprise as momentum in both business units have continued strong and as such our estimates were already taking this into account. We’ve made small upward adjustments to our estimates. We maintain our HOLD recommendation with new TP of 29.5 (prev. 24.5).

Continued good momentum in both business areas

Vaisala cited that strong demand in both business areas has continued. In Q3 Vaisala’s orders received YTD was up +34% yoy with bulk of growth being organic, supported by acquired businesses. Strikes in November and December have been a significant risk to production and logistics, but Vaisala has been able to maintain its good delivery capacity also during Q4. The continued strong demand has had a positive impact on gross margin and project margins have also remained at a good level. However, there are still uncertainties related to the rest of the year, like the ongoing strikes in France, and estimating the impact of these is challenging.

Outlook upgrade not a surprise, estimates slightly upwards

Vaisala now estimates 2019 net sales of 395-405 MEUR and EBIT to be in the range of 36-42 MEUR. Previous outlook was net sales of 380-400 MEUR with EBIT of 25-35 MEUR including 10-12 MEUR acquisition related amortization and one-off expenses. As our 2019E estimates for net sales of 398 MEUR were in the upper range of the previous guidance and our EBIT estimate of 36.4 MEUR was slightly above previous guidance, the outlook upgrade did not come as a surprise. We have slightly adjusted our 2019 and onwards estimates upwards reflecting the continued good momentum. As noted previously, with acquired businesses integrated into Vaisala’s sales channel and continued good organic momentum in both W&E and IM, we see targeted 5% sales growth clearly achievable and road to >12% margins progressing well. The driver for profitability improvement is larger volumes and continued good growth in industrial business. We estimate IM share of Vaisala’s EBIT in ’20-21E to grow to 66% (vs. 56-57% in ’17-’18), driving Vaisala’s ~10-12% EBIT growth and EBIT margins of 10.5-11% (12-13% adj. for IAC).

Valuation is stretched, but justified

Vaisala’s share har rallied +105% YTD, being now at an all-time high. On our raised estimates, Vaisala is trading at PPA amortizations adjusted EV/EBIT multiples of 23x and 21.6x for ‘19E and ‘20E, a 30-38% premium to our peer group median despite exhibiting lower profitability profile than our peer group. However, a high valuation and premium are in our view justified due to the current stable outlook for W&E, strong ESG profile and growing dividend, and especially IM’s highly profitable growth with possibility of further add-on acquisitions. On the back of our raised estimates, we raise our target price to 29.5 euros (prev. 24.5) and maintain our HOLD recommendation.

Vaisala - Strong performance continues

25.10.2019 | Company update

Vaisala delivered a strong Q3 on all fronts but surprisingly kept their guidance intact despite strong YTD performance and good momentum in both W&E and IM. We’ve updated our estimates for the coming years due to better overall growth profile and increasing profitability driven by IM’s continuing good performance. On the back of our raised estimates, we raise our target price to 24.5 euros (prev. 21) and maintain our HOLD recommendation.

Strong quarter on all fronts, with contribution from W&E

On the back of a good Q2 report, Vaisala delivered an even better Q3, which clearly beat expectations. Orders received increased +37% y/y (+20% organic) to 105.1m (vs. 76.8m Q3’18), with orders received as well as sales growth coming from both business areas and all geographies. Order intake for W&E was +45% (+27% organic), with mostly mid-sized orders, a positive signal. Q3 net sales grew +25% to 105.2m (vs. 100.4m Evli / 99.7m cons.). With the help of strong sales growth (W&E +27%, IM +22%), EBIT was 16.3m (vs. 11m Evli/13m cons), an 15.5% EBIT margin. IM posted good figures, with +22.4% growth (9% organic), an all-time high quarter, and solid 23.6% EBIT margin (24.7% adj. margin). Biggest positive contribution was W&E with +27% (+14% organic) sales growth, and EBIT margin of 13.5% (16% adj. margin).

Outlook unchanged despite strong performance so far

Despite the beat and good figures YTD, Vaisala repeated its FY’19 guidance: sales between 380–400m, EBIT between 25–35m including 10–12m PPA amortization and one-offs. Our pre-Q3 estimates were already in the upper end of the guidance, and now with the result beat we have raised our FY’19E estimates slightly above the guidance. We also increase by ~2% our estimates for 2020E-21E due to better growth profile in both business areas. With the acquired businesses integrated into Vaisala’s sales channel and continued good organic momentum in both W&E and IM, we see targeted 5% sales growth clearly achievable. We estimate that IM share of Vaisala’s EBIT in ‘19E and ‘20E will be around 65-67% (vs. 56-57% in ’17-’18), resulting in ~13-17% EBIT growth and EBIT margins of 10-11% (12-13% adj. for PPA).

Valuation becoming stretched

Vaisala’s share har rallied +70% YTD and +30% since Q2 the report, being now at an all-time high. On our raised estimates, Vaisala is trading at adj. EV/EBIT multiples of 20x and 18.5x for ‘19E and ‘20E, a 20-26% premium to our peer group despite exhibiting a lower growth and profitability profile than our peer group. However, a high valuation and premium are in our view justified due to the stable outlook for W&E and especially IM’s highly profitable growth with possibility of further add-on acquisitions. On the back of our raised estimates, we raise our target price to 24.5 euros (prev. 21) and maintain our HOLD recommendation.

Vaisala - Strong Q3 result, clear beat

24.10.2019 | Earnings Flash

Vaisala delivered a strong Q3 report, with a solid perfomance all around. Vaisala’s Q3 net sales grew 25% to 105.2 MEUR vs. 100.4 MEUR our expectation and 99.7 MEUR consensus. Q3 reported EBIT was 16.3 MEUR vs. our expectation of 11 MEUR (13 MEUR consensus). Business outlook is unchanged.

  • Group level results: Q3 net sales grew 25% to 105.2 MEUR vs. 100.4 MEUR our expectation and 99.7 MEUR consensus. Q3 EBIT was 16.3 MEUR vs. our expectation of 11 MEUR (cons. 13 MEUR). EPS was 0.37 (0.23 Evli, 0.27 consensus).
  • Gross margin was 55.3% vs. 55.9% last year
  • Orders received was 105.1 MEUR vs. 76.8 MEUR last year. Orders received increased by 37% and growth without currency impact and acquisitions was 20%.
  • Weather & Environment (W&E) net sales grew 27% (14% excl. FX and M&A) to 69.1 MEUR vs. 66.0 MEUR our expectation. EBIT was 9.3 MEUR (5.0 MEUR Evli). Order intake growth 45% in Weather and Environment, 27% growth excl. FX and M&A.
  • Industrial Measurements (IM) net sales grew 22% (9% excl FX and M&A) to 36.1 MEUR vs. 34.5 MEUR our expectation. EBIT was 8.5 MEUR (6 MEUR Evli). Industrial Measurements order intake grew by 23%, 9% excl. FX and M&A.
  • Business outlook for 2019 unchanged: 2019 net sales to be in the range of EUR 380–400 million and operating result (EBIT) to be in the range of EUR 25–35 million including EUR 10–12 million acquisition related amortization and one-off expenses related to a lease contract.

Vaisala - Performance on track

22.07.2019 | Company update

Vaisala delivered a good Q2 result with a clear EBIT beat. The outlook for 2019 remains positive as Vaisala enters H2 which is seasonally stronger for W&E. The acquisitions of Leosphere and K-Patents are bearing fruit and we see both accelerating sales further when fully integrated into Vaisala’s sales channel. We raise our target price to 21 euros (prev. 20) but maintain HOLD recommendation.

Acquired businesses bearing fruit

Vaisala’s Q2 net sales were 96.1 MEUR vs. 94.2 MEUR our expectation (93.5 MEUR consensus). Q2 EBIT was 7.2 MEUR vs. our expectation of 3.2 MEUR (4.5 MEUR consensus). The EBIT beat was driven by slightly better sales growth and 4 percentage points higher gross margin (54% vs. 50% Q2/18) in both business units, which was a result of product and project profitability, and currency tailwind. W&E’s net sales growth was 16.7% and it came mostly from wind lidars. IM net sales growth was 26%, with K-Patents contributing around 12% of the growth. The integration of Leosphere is now complete and K-Patents is expected to be integrated during Q3, therefore sales synergies should start to become more visible during H2.

H2 seasonally stronger for W&E, estimates revised upward

After the solid Q2 result, Vaisala is on track to deliver in H2, which is seasonally stronger for W&E. Post Q2 result, we have adjusted slightly upward both our sales and EBIT estimates for this year and coming years reflecting the confidence we have in Vaisala’s strategy. We expect 2019E net sales to be 392 MEUR (12% growth yoy) and reported EBIT to be 35 MEUR (46 MEUR adjusted for PPA and one-offs), representing 9% EBIT margin (12% adj. EBIT margin). Our EBIT estimates are now in the upper end of the company’s 2019 guidance. For 2020-21E, we expect 4-5% net sales growth, and we estimate EBIT margin to gradually improve from 9% 2019E towards 11% 2021E (adjusted EBIT margin from 12% 2019E towards 13% in 2021E).

HOLD maintained with revised TP of 21 euros (prev. 20)

On our adjusted EBIT estimates, Vaisala is trading some 10-15% under our peer group on EV/EBIT multiples. Reflecting our estimates revisions, we raise our target price to 21 euros (prev. 20) but maintain HOLD recommendation.

Vaisala - Clear Q2 beat, with good contribution from acquired businesses

19.07.2019 | Earnings Flash

Vaisala’s Q2 net sales at 96.1 MEUR vs. 94.2 MEUR our expectation and 93.5 MEUR consensus. Q2 EBIT was 7.2 MEUR vs. our expectation of 3.2 MEUR (4.5 MEUR consensus). Adjusted EBIT was 9.4 MEUR vs. our 6.2 MEUR adjusted EBIT expectation.

  • Group level results: Q2 net sales at 96.1 MEUR vs. 94.2 MEUR our expectation and 93.5 MEUR consensus. Q2 EBIT was 7.2 MEUR vs. our expectation of 3.2 MEUR (4.5 MEUR consensus). Adjusted EBIT was 9.4 MEUR vs. our 6.2 MEUR adjusted EBIT expectation. EPS was 0.14 (0.06 Evli, 0.08 consensus).
  • Gross margin was 54.2% vs. 50.1% last year
  • Order received was 98.0 MEUR vs. 71.1 MEUR last year
  • Weather & Environment (W&E) net sales was 63.2 MEUR vs. 60.2 MEUR our expectation. EBIT was 0.6 MEUR (-1.5 MEUR Evli)
  • Industrial Measurements (IM) net sales was 34.8 MEUR vs. 34.0 MEUR our expectation. EBIT was 7.5 MEUR (4.7 MEUR Evli)
  • CEO comment: “Vaisala’s second quarter orders received and net sales were strong in all geographical areas. Around half of the order growth came from acquired companies. Excellent growth of orders received in Weather and Environment Business Area reached 49%. This growth was generated by medium-sized orders and especially in sounding and wind lidar businesses.”
  • Business outlook for 2019 unchanged: 2019 net sales to be in the range of EUR 380–400 million and operating result (EBIT) to be in the range of EUR 25–35 million including EUR 10–12 million acquisition related amortization and one-off expenses related to a lease contract.

Vaisala - CMD notes: Roadmap for profitable growth

17.06.2019 | Company update

Vaisala held its CMD last Friday, where the company provided insight into its businesses and updated strategy. Based on the CMD and updated financial targets, we see Vaisala’s roadmap for profitable growth as attainable and we have made smaller upward adjustments to our sales estimates. We maintain HOLD recommendation with new target price of 20 euros (prev. 18).

Updated financial targets – more emphasis on growth

Vaisala targets an average annual growth exceeding 5% and EBIT margin exceeding 12%. Earlier Vaisala’s objective was growth with an average annual growth of 5%, and to achieve 15% EBIT margin. The slightly more ambitious growth target is based on both organic and non-organic opportunities, with key areas of growth being liquid measurements, new industrial instruments, digital solutions, and wind lidars. The recent acquisitions of Leosphere (wind lidars) and K-Patents (liquid measurements), provide growth areas for both W&E and IM segments.

Roadmap for profitable growth

We have made minor upward changes to our sales estimates based on the presented roadmap and new financial targets. We expect 2019E net sales to be 390 MEUR (12% growth yoy, driven by Leosphere and K-Patents acquisitions) and EBIT to be 31 MEUR (43 MEUR adjusted for PPA and one-offs), representing 8% EBIT margin (11% adj. EBIT margin). For 2020-21E, we expect above 4% net sales growth, and we estimate EBIT margin to gradually improve from 8 % 2019E towards 10% 2021E (adjusted EBIT margin from 11% 2019E towards 12% in 2021E). Non-organic growth is very likely (although not reflected in our estimates), hence we see above 5% growth very achievable.

HOLD maintained with TP of 20€ (prev. 18)

On our estimates, Vaisala is trading close to par with our peer group on adjusted EV/EBIT multiples. On EV/Sales multiples, Vaisala is trading below peers, reflecting the potential valuation upside should Vaisala succeed in accelerating its profitable growth. We raise target price to 20 euros (prev. 18) but maintain HOLD recommendation.

Vaisala - Focus on integration and execution in H2

25.04.2019 | Company update

Vaisala’s Q1 missed our estimates, but overall our expectations for full year 2019E remain intact. After two recent acquisitions and subsequent increase in operating expenses, Vaisala needs to succeed in integrating the acquired business. Strong received orders and pick up in larger projects support outlook. We maintain HOLD recommendation with target price of 18 euros.Vaisala’s Q1 missed our estimates, but overall our expectations for full year 2019E remain intact. After two recent acquisitions and subsequent increase in operating expenses, Vaisala needs to succeed in integrating the acquired business. Strong received orders and pick up in larger projects support outlook. We maintain HOLD recommendation with target price of 18 euros.

Q1 miss, but order book and projects support outlook

Vaisala’s Q1 result miss was due to lower than expected seasonal net sales in Weather & Environment. W&E net sales were 49.6 MEUR vs. 55 MEUR our expectation, while Industrial Measurements net sales were 34.6 MEUR vs. 33 MEUR our expectation. On Group level, Q1 EBIT came in at 0.0 MEUR vs. our expectation of 2.3 MEUR. Despite Q1 miss, the outlook for both BU’s looks supportive with strong orders received (+30%) and recent pick up in larger W&E projects (15 MEUR Argentina and 7 MEUR Sweden deals announced).

Estimates unchanged, OPEX increase to weigh on 2019E EBIT

Post Q1, our estimates are unchanged. We expect 2019E net sales to be 382 MEUR (10% growth yoy) and EBIT to be 31 MEUR (41 MEUR adjusted for PPA and one-offs), representing 8.1% EBIT margin (10.8% adj. EBIT margin). Estimated EBIT decline in 2019E is due to acquisitions related increase in operating expenses, which we estimate to increase roughly 16% to 172 MEUR (vs. 148 MEUR 2018).

HOLD maintained with target price of 18 euros

On our estimates, Vaisala is trading at adjusted EV/EBIT and EV/EBITDA multiples of 17x and 14x for 2019E, which is 4-8% lower than our peer group. Looking at 2020E multiples, valuation looks slightly more attractive given our estimated EBIT improvement, but we are not ready to put emphasis on next year due to the on-going process of integrating the acquired businesses. We see current valuation as fair, thus we maintain HOLD and target price of 18 euros.

Vaisala - Q1 below our expectations

24.04.2019 | Earnings Flash

Vaisala’s Q1 net sales at 84.2 MEUR vs. 87 MEUR our expectation and 88.5 MEUR consensus. Q1 EBIT was 0.0 MEUR vs. our expectation of 2.3 MEUR. Adjusted EBIT was 3.0 MEUR vs. our 5.0 MEUR adjusted EBIT expectation.

  • Group level results: Q1 net sales at 84.2 MEUR vs. 87 MEUR our expectation and 88.5 MEUR consensus. Q1 EBIT was 0.0 MEUR vs. our expectation of 2.3 MEUR. Adjusted EBIT was 3.0 MEUR vs. our 5.0 MEUR adjusted EBIT expectation
  • Gross margin was 53.2% vs. 51.3% last year
  • Orders received was 113 MEUR vs. 87.1 MEUR last year
  • Weather & Environment (W&E) net sales was 49.6 MEUR vs. 55 MEUR our expectation. EBIT was -4.3 MEUR
  • Industrial Measurements (IM) net sales was 34.6 MEUR vs. 33 MEUR our expectation. EBIT was 4.6 MEUR
  • CEO comment: “Integration of Leosphere is proceeding according to plan and integration of K-Patents has started well during the first quarter. We expect to complete these integration projects during the second half of this year.”
  • Business outlook for 2019 unchanged: 2019 net sales to be in the range of EUR 380–400 million and operating result (EBIT) to be in the range of EUR 25–35 million including EUR 10–12 million acquisition related amortization and one-off expenses related to a lease contract.

Vaisala - Pressure on profitability in 2019

14.02.2019 | Company update

Vaisala’s dividend proposal was in-line with expectations, but outlook was slightly weaker than expected. Due to increase in R&D and sales & marketing spend, we’ve cut our EBIT estimates for 2019. We maintain HOLD recommendation with new target price of EUR 18 (prev. 19).

Outlook for 2019

Vaisala expects market for traditional weather solutions to be flat in 2019, while market for industrial measurement solutions is expected to continue to grow in all regions. Increasing investments in R&D and sales & marketing are expected to burden profitability in 2019. Vaisala estimates its full-year 2019 net sales to be in the range of EUR 380–400 million and its operating result (EBIT) to be in the range of EUR 25–35 million including EUR 10–12 million acquisition related amortization and one-off expenses related to a lease contract. The new outlook with an adjusted EBIT range of EUR 35-47m was slightly weaker than what we had expected; our previous EBIT estimate of EUR 45m (46m cons) being in the higher end of the range.

Estimates revised down for 2019

We expect Vaisala’s 2019E net sales to be EUR 385m representing +10% growth y/y. Sales growth will be driven by the recent acquisitions, Leosphere and K-Patents, which we estimate to add around 24 MEUR and 12 MEUR to top line in 2019E. We’ve adjusted our 2019E EBIT estimates downwards to reflect increase in R&D and sales & marketing spend. We estimate 2019E reported EBIT to be EUR 31m (EUR 42m adjusted for EUR 11m PPA and one-off expenses). For 2020-21 we expect 3.6% and 4.3% growth, with operating margin improving to 11.6% and 11.8% respectively.

HOLD maintained with new TP of 18 (prev. 19)

On our revised estimates Vaisala is trading at EV/EBIT and EV/EBITDA multiples that are ~10% lower than our peer group, but we see this as fair given the near-term weaker outlook. We maintain HOLD recommendation with TP of EUR 18 (prev. 19).

Vaisala - Outlook for 2019 disappoints

12.02.2019 | Earnings Flash

Vaisala had previously announced preliminary Q4 results, so the focus was on dividend proposal and outlook. The outlook guides for clearly lower EBIT than what we or consensus were expecting.

  • Dividend proposal is 0.58 (0.55 Evli / 0.58 consensus)
  • Business outlook for 2019: Vaisala estimates its full-year 2019 net sales to be in the range of EUR 380–400 million and its operating result (EBIT) to be in the range of EUR 25–35 million including EUR 10–12 million acquisition related amortization and one-off expenses related to a lease contract.
  • Our estimates for 2019E are net sales of EUR 387m (382m cons.) and EBIT of EUR 45m (46m cons.)

Vaisala - Positive profit warning

15.01.2019 | Preview

Vaisala issued a positive profit warning yesterday, with operating result being better than previously guided (EBIT range 30-36 MEUR). Operating profit for 2018 was 39 MEUR vs. 35.5 MEUR our estimates. Net sales for 2018 was 349 MEUR vs. 349 our estimate. W&E net sales in Q4 were 78 MEUR vs. 78 MEUR our estimates, IM net sales in Q4 were 31 MEUR vs. 30 MEUR our estimates. Most of the profitability beat was due to better than expected profitability in W&E, were EBIT was 10 MEUR vs. 5.2 MEUR our estimates (IM EBIT 6 MEUR vs. 5.5 MEUR our estimate).

Favorable mix in W&E and higher sales in IM impacted EBIT

In the fourth quarter 2018, operating result was higher than estimated due to higher than estimated gross profit and other operating income. In W&E, gross margin was higher than estimated due to favorable sales mix. In IM, net sales were higher than estimated resulting in higher operating result. Other operating income included EUR 1.5 million of reversal of earn-outs and other contractual liabilities related to acquisitions in the recent years.

2019E growth mainly non-organic, TP 19 and HOLD recommendation maintained

We estimate Vaisala’s net sales to grow 11% to 387 MEUR in 2019E. Growth is mainly driven by the Leosphere and K-Patents acquisitions (adding 24 MEUR and 12 MEUR to top line in 2019E). We estimate 2019E EBIT to be 45 MEUR. On our estimates Vaisala is trading at 2019/20E at P/E 20.4 and 17.9, which is ~17% higher than peer group. On our estimates, EV/EBIT multiples for 2019/20E are 14.5 and 12.8 respectively, which are in line with peer group. We await some more color from the Q4 call, especially regarding China and the W&E project outlook. We retain our HOLD recommendation and target price of 19 euros.

Vaisala - Leosphere and order intake reflect on W&E estimates

25.10.2018 | Company update

In Q3’18, Weather and Environment (W&E) order intake was y/y lower for the second consecutive quarter, partly due to the absence of large orders. Vaisala maintained its cautious view on the Chinese demand for traditional weather observation solutions during 2018. We have updated our estimates particularly for W&E. On our estimates, the positive net sales and EBIT margin impact of the recently acquired Leosphere is partly offset by more cautious growth estimates for the rest of W&E. We maintain HOLD rating with a TP EUR 19 (21).

Timing of W&E projects caused some surprises

After the Q2’18 result, Vaisala estimated that the high share of project revenue will negatively affect W&E’s profitability during H2’18. However, Q3’18 turned out to be an exception: the timing of W&E projects resulted in weaker net sales but supported gross margin and EBIT margin, as the share of typically low margin project deliveries fell to 25% (37% in Q3’17) in W&E. According to Vaisala, project gross margins also happened to be better y/y.

Low W&E order intake continued in Q3’18

In Q3’18, W&E order intake amounted to 48.7 MEUR (-33% y/y) which was the second consecutive weak quarter, even when we adjust for the 6.3 MEUR Vietnamese contract order in Q3’17. According to Vaisala, the demand for W&E products in China has not changed significantly from Q2’18 to Q3’18. The company repeated its view that the Chinese demand for traditional weather observation equipment is expected to decline moderately y/y in 2018. Vaisala sees that the main Chinese customer for traditional weather stations may have saturated its network, which could explain the weaker demand in 2018. Meanwhile, Vaisala sees that sales to Chinese airports are a growing business.

HOLD maintained with a TP of EUR 19 (21) per share

We have updated our estimates, which now reflect the acquired Leosphere. In addition, we lower W&E sales growth estimates for other segments due to the continued weak development in order intake and continued cautiousness regarding the Chinese market. In our estimates the weak W&E order intake partly offsets the estimated growth boost from Leosphere. Our 2019E estimates and peer EV/EBIT multiples imply a value of 18.8 EUR per share when we adjust for Vaisala’s net debt. We maintain HOLD rating with a target price of EUR 19 (21) per share.

Vaisala - Initiating coverage with HOLD

28.06.2018 | Company report

We estimate net sales to grow at a CAGR of 4.1% in 2018E-2020E, driven by Industrial Measurements and growth areas in Weather and Environment. Meanwhile, we estimate that improving sales mix and economies of scale raise Vaisala’s EBIT margin to 13.7% in 2020E. We initiate coverage with a HOLD rating and a target price of EUR 21 per share.

Industrial Measurements - Strong growth and profitability

In 2010-2017, Industrial Measurements (IM, 33% of sales) net sales grew at a CAGR of 8.2%. In the past five years, IM’s operating margin has improved from 12 to 20 percent, driven by scale economies. The business area follows a product leadership strategy and the current focus is on the power transmission and life sciences markets.

Weather and Environment – Focusing on growth areas

In 2010-2017, Weather and Environment (W&E, 67% of sales) net sales grew at a CAGR of 2.3%. Operating margin was 8.2% in 2017E. W&E is currently focusing on meteorological projects in developing countries, digital solutions, and air quality related solutions. Meanwhile, growth is relatively slow for traditional meteorological equipment in the developed countries.

Estimating EUR 376m sales, 13.7% EBIT margin in 2020E

Vaisala targets 5% CAGR sales growth (4.0% CAGR in 2010-2017) and 15% EBIT margin (12.3% in 2017) in the long term. We estimate 4.1% CAGR sales growth for 18E-20E, driven by IM sales and growth areas in W&E. We estimate that Vaisala’s EBIT margin improves to 13.7% in 2020E, driven by economies of scale and the increasing share of IM sales.

Initiating coverage with a HOLD rating and TP of EUR 21

Our 2019E estimates and peer EV/EBIT multiples imply a value of 20.4 EUR per share. Meanwhile, our DCF model implies a value of EUR 21.3 per share. We see that Vaisala’s current share price already reflects our expectations of continued growth and gradual profitability improvements. We initiate coverage with a HOLD rating and a target price of EUR 21 per share.

Vaisala - Q3/19 video interview with CEO Kjell Forsén

27.11.2019

Vaisala - Company presentation

27.08.2019
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Company Facts

Guidance

Vaisala estimates that its full-year 2024 net sales will be in the range of EUR 530–570 million and its  operating result (EBIT) will be in the range of EUR 63–78 million.

Financial targets

For 2021-2024: Average annual growth of 7% and an EBIT-margin of 15%.

Share price (EUR)


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