Otovo (Buy, TP: NOK16.00) - Profitability starting to improve
Otovo reported a decent Q2 operationally, with its EBITDA losses starting to narrow slightly. Given a strong gross-margin trend and its cost-control plans, we have raised our 2023–2024e EBITDA by 7-9%, despite continued soft sales prompting us to reduce our installation forecasts for H2 and 2024. We still believe tangible signs of improving profitability and monetisation of the subscription portfolio are needed for a re-rating of the stock and thus maintain the 50% discount to our NOK32/share SOTP. Hence, we reiterate our BUY and NOK16 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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