Fortnox (Buy, TP: SEK85.00) - Thesis intact
From the Q1 results, we were encouraged by: 1) ARR growth of 50% YOY (17% QOQ); 2) an incremental margin of 48%; and 3) FCF adjusted for its lending business growing by 90% YOY, underpinning its compounding dynamics and ample margin expansion potential. Despite the shares’ strong performance YTD (+49%), we remain bullish on Fortnox as one of the few software stocks with financials that should improve YOY despite concerns about a softer macro environment in 2023e (36%+ organic growth YOY at 42% EBIT margin), with a durable growth runway to compress its valuation multiples. We reiterate our BUY and SEK85 target price.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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