New targets fulfilling our wish list

Storytel (Hold, TP: SEK83.00) - Struggled to live up to expectations

Investors had grown accustomed to strong results after five consecutive quarterly ‘high quality’ beats. However, its Q1 results did not meet MF consensus, which dents the short-term momentum of the story, in our view. We believe Storytel could reverse the negative sentiment at its 15 May CMD, but remain on the sidelines to see if the high bar from consensus is revised. The valuation remains undemanding, in our opinion, as we forecast adj. EBIT growth of 25% YOY in 2025. We reiterate our HOLD, an...

Attractive entry point amid strong growth path

Q1: solid overall but a tad light

Q1e: solid growth and expanding margins

Storytel (Hold, TP: SEK96.00) - A story on pause

We continue to see a neutral risk/reward ahead of Storytel’s Q1 results and strategy update in May, as expectations have crept up with recent share price gains. Its step-change in profitability and cash flows is mainly explained by gross-margin expansion, and limited low-hanging fruit remains, in our view. Thus, we see less upside potential for meaningful consensus revisions to propel the stock higher. Valuation is undemanding, as we forecast EPS growth of 32% YOY in 2025. We reiterate our HOLD ...

Dividend signals confidence, but strategic update matters more

Storytel (Hold, TP: SEK96.00) - A story on hold

The Q4 results were strong across the board, and a solid gross margin again largely explained the recent profit step change; however, we believe there are few low-hanging fruit left. While we forecast 33% YOY growth in EPS in 2025 and the valuation remains undemanding, we see little likelihood of meaningful consensus revisions providing a catalyst other than multiples expansion, implying a modest risk/return. Storytel plans to unveil new medium-term targets in Q2; we believe they could be conser...

Confidence grows after a strong Q4

Strong Q4 across the board with impressive profitability

Executing on content strategy with new acquisition

Storytel (Buy, TP: SEK81.00) - To end 2024e with a strong chapter

We expect Storytel to close 2024 with a strong chapter, partly aided by one-offs. Its improved gross margin remains the key driver behind the recent step change in EPS and FCF, although we acknowledge most of the lowest-hanging fruit to improve this is likely in the past. We could see investors take a wait-and-see approach until the new CEO presents her strategy in H1e, while appreciating 20% EPS growth YOY in 2025e at an undemanding valuation. We reiterate our BUY and have raised our target pri...

Takeaways from CEO dinner

Cash flow outlook even stronger

Storytel (Buy, TP: SEK80.00) - Q3 displays flywheel dynamics

Storytel’s broad-based Q3 beat showcased flywheel dynamics, with solid net adds, record-low churn, a growing share of internal content consumption raising margins, improved customer acquisition efficiency, operating leverage from cost savings, and strong cash flows. We reiterate our BUY and have increased our target price to SEK80 (78), as Storytel’s raised full-year guidance continues to fuel positive consensus revisions, allowing for a combination of a step-change in earnings, FCF momentum, an...

Q3: Impressive profitability and guidance upgrade

Strength ahead

Storytel (Buy, TP: SEK78.00) - Gross margin momentum

We are 7% above Modular Finance consensus Q3e adj. EBITDA on positive content mix and the full impact of recent cost actions. We have now seen the long-awaited shift in the investor base, but acknowledge that investors could still take a wait-and-see approach to Storytel’s new CEO (starts 1 October) and likely strategic review before there is a re-rating. We reiterate our BUY, with a trimmed SEK78 (80) target price; we continue to see a step-change in profitable growth and FCF generation at an u...

Low churn, strong defense

Broad-based strength reinforces BUY