Otovo (Hold, TP: NOK2.60) - Seeing is believing
With significant concerns about Otovo’s business model in the capital markets, we believe it is crucial for the company to prove its operating model by generating profit. We believe this could take time as the challenging market environment and fierce competition in residential solar constrains growth, and we do not forecast sufficient installation volumes for positive EBITDA generation until 2026e. We reinstate a recommendation with a HOLD and NOK2.6 target price, and believe it is key for management to execute well and show tangible signs of improving profitability for any re-rating of the stock despite the 87% share price decline over the past year.
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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