CEO departure increases uncertainty

Exciting year ahead

Seasonally weak Q1 to show strong improvement. We have become more optimistic about profitability. BUY: Storytel is on a good path and the valuation is too low.

Storytel (Buy, TP: SEK75.00) - The plot thickens

We believe recent insider trading and EQT’s board representative not standing for re-election could signal a potential shift in the shareholder base and direction for Storytel, which could create some short-term uncertainty, but also trigger a strategic review. We reiterate our BUY and SEK75 target price as we see potential upside to Storytel’s 2024 EBITDA margin guidance with a step change in FCF generation driving an undemanding valuation, with a 2025e EV/EBITDA of 7x, P/E of 19x and OpFCF yie...

Storytel (Buy, TP: SEK75.00) - Unveiling the next chapter

The share price is up 130%+ since its October-lows, and we believe we have reached an inflection point. The SEK672m writedown of Audiobooks.com and less focus on its 15 expansion markets marked the end of the turnaround, in our view. In its next chapter, management is building credentials of overperformance and the 2024 guidance looks to be in reach. We believe Storytel offers investors sustainable double-digit organic sales growth, attractive profitability, strong FCF ramp-up and an undemanding...

Storytel (Buy, TP: SEK68.00) - Strong momentum set to continue

Our app data suggests Storytel’s organic growth continues to accelerate after the summer months, and we expect strong Q4 results. We see an impairment risk of ~SEK470m related to acquisitions made in 2020–2022 but believe this is factored into the depressed share price. We reiterate our BUY and SEK68 target price.

Storytel (Buy, TP: SEK68.00) - Turning the page

We believe Storytel is making progress on its strategic shift, which saw a step-change in Q3 – it beat Visible Alpha consensus due to: 1) revenue and subscriber growth; 2) margin expansion across all P&L lines; and 3) cash flow improvements, alleviating concerns about weak consumer demand. Storytel seems to be in better shape than it has been in many years as it has been able to attract more and higher-quality subscribers, at a lower cost, while showing improved churn. We have raised our 2023–20...

Storytel (Buy, TP: SEK65.00) - Step-change Q3 results ahead

Investor sentiment could remain lukewarm short-term given competitive concerns related to Spotify’s accelerated audiobook push, weak consumer trends, a lack of valuation support near-term from profit lines below EBITDA in the P&L, and shareholder overhang risks. That said, we expect strong Q3 results based on robust summer months, according to our app data analysis, and we are 22% above Visible Alpha consensus EBITDA, while its likely first positive OpFCF could reestablish confidence in its prof...

Northern Lights

Storytel (Buy, TP: SEK74.00) - Acceleration in turnaround

We still expect investor focus on weaker consumer trends, a lack of valuation support near-term from profit lines below EBITDA in the P&L, and shareholder overhang risks to weigh on sentiment short-term. Five quarters into Storytel’s turnaround, we like that most metrics are trending in the right direction and that Q2 brought a step-change, which should mark a trough in negative consensus revisions. With back-end-loaded margin expansion in its updated 2026 targets, we see the main potential shar...

Storytel (Buy, TP: SEK74.00) - A strategy to lean on

Storytel is taking steps to restore investor confidence. Its CMD signalled what we were looking for, with: 1) forward-leaning, yet in our view attainable medium-term financial targets; 2) its 2023 guidance unchanged, easing slowdown concerns; 3) improved transparency and progress on key unit and user economics; 4) a differentiated strategy to position itself as a premium service; and 5) a promising AI collaboration. We believe the pieces are in place for 2024e to rebuild investor confidence and ...

Northern Lights

Storytel (Buy, TP: SEK72.00) - Next likely trigger: CMD in June

With investor confidence close to an all-time low, we consider it fair to assume the share price should have bottomed out. We expect the new management team to provide an updated medium-term roadmap and financial targets at the June CMD – we forecast a 10% organic net sales CAGR to 2025 and an 11% EBITDA margin for 2025, suggesting ~2.8%-points annual EBITDA margin expansion, which should gradually restore confidence in the self-funded growth strategy. We reiterate our BUY but have cut our targe...

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Storytel (Buy, TP: SEK80.00) - Two steps forward, one step back

Ahead of Storytel’s Q1 results, we have lowered our 2023–2024e net sales by 3–4% and adj. EBITDA by 22–16% on trimmed organic growth assumptions but a relatively flat opex base. We still expect a rather muted share price performance until the new management team implements its strategy in the coming months, but see a Q2 or Q3 CMD as a potential share-price catalyst that could restore investor confidence in Storytel’s self-funded growth strategy. We reiterate our BUY but have lowered our target p...

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Storytel (Buy, TP: SEK102.00) - Profitable growth pivot continues

In our view, Storytel is stuck between being a ‘low-growth’ growth stock, and its margin profile is still too low for it to screen as low-cost on profitable valuation metrics. Its decision to not provide 2023 guidance sparked investor concerns but triggered only minor 2023–2024e revisions. Storytel’s shares might be ‘dead money’ until its new management team implements its strategy in the coming months, while we believe the Q3 CMD could be a share-price catalyst. We reiterate our BUY but have lo...

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Storytel (Buy, TP: SEK103.00) - Audiobook thrill amid macro chill

We believe most building blocks for Storytel are in place as: 1) it has shown it can generate profitable growth; 2) we are encouraged by the new CEO’s ambitions, although it could take a few quarters to implement the new strategy; 3) the balance sheet risk is being removed (shift to self-funded growth); and 4) the market dynamics have improved. We reiterate our BUY but have cut our target price to SEK103 (122), having adjusted the share count for what we view as Storytel’s final defensive rights...

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Storytel (Buy, TP: SEK122.00) - First positive FCF since 2017

We believe the worst is behind Storytel as its recent performance bolsters our confidence that its strategic shift towards profitable growth is progressing ahead of our expectations. In our view, this should gradually refute the idea that Storytel is not capable of reaching profitability and achieving positive FCF, while we believe the new CEO made a good first impression. We have raised our 2023–2024e EBITDA by 41–14% and no longer include a rights issue in our forecasts. We reiterate our BUY a...