Nolato (Buy, TP: SEK64.00) - Maintaining stability

We expect 4% organic growth YOY for Q1 (Modular Finance consensus 6%) and further increased growth towards end-2025 and into 2026, when the new order in Medical Solutions should start to contribute. We have reduced our 2025–2026e EBITA by 5–6% on updated FX and slightly lower contract rollout expectations for Medical Solutions. We reiterate our BUY but have reduced our target price to SEK64 (65).

Nolato (Buy, TP: SEK65.00) - Q4 signals strength ahead

Sales growth was 6% YOY (Modular Finance consensus 3%), of which organic growth was 5%. EBITA was SEK240m (3% above consensus), and EPS was SEK0.61 (2% above consensus). The EBITA beat was primarily driven by Engineered Solutions, which exceeded consensus by 14%. This was largely due to a strong Materials performance, supported by a recovery in the Telecom market. We have raised our EBITA by 1% in 2025e and by 6% for 2026e, and our target price to SEK65 (64), while we reiterate our BUY.

Nolato (Buy, TP: SEK64.00) - Turning the corner

We forecast 2% organic growth in Q4, indicating 2024 was almost flat, after two challenging years of negative growth; we expect further improvements in 2025 and 2026. Following a change of analyst, we have made minor divisional estimate changes and cut our 2025–2026e EBITA by 5–8%. We reiterate our BUY but have reduced our target price to SEK64 (66) to reflect the new organisation.

Nolato (Buy, TP: SEK66.00) - Continued margin improvement

Nolato reported a Q2 with net sales and EBITA 3% below our estimates, driven mainly by slower organic growth than we expected in Medical Solutions, and a quicker phasing out of VHP volumes. However, the EBITA margin expanded 200bp YOY and 30bp QOQ, again indicating that Nolato’s cost-efficiency programme and strategic price increases have indented effects. We have edged down our 2024–2025e EBITA by 1%. We reiterate our BUY and SEK66 target price.

Nolato (Buy, TP: SEK66.00) - Expecting continued efficiency

We expect Nolato to have continued its margin improvement efforts QOQ through small, continuous gains in pricing and internal efficiency, with Medical being the main margin driver in Q2e. We have lowered our 2024–2025e EBITA by 2–3% due to reduced FX assumptions. We reiterate our BUY and have nudged up our target price to SEK66 (64) on higher peer valuations.

Nolato (Buy, TP: SEK64.00) - Positive margin surprise

Nolato reported a strong Q1, driven mainly by a margin beat in Engineered Solutions from a better product mix, stable industrial volumes and the China cost-savings programme showing progress earlier than expected. The margin beat and less negative YOY growth has prompted us to raise our 2024–2025e EBITA by 8–3%. We reiterate our BUY and have raised our target price to SEK64 (57).

Nolato (Buy, TP: SEK57.00) - GLP-1 a long-term positive factor

We reiterate our BUY and target price of SEK57 ahead of Nolato’s Q1 report, where we expect a continued improving EBITA margin QOQ from the cost-efficiency programme, along with minor volume gains. The new GLP-1 contract also adds confidence in continued long-term Medical Solutions growth and margin expansion.

Nolato (Buy, TP: SEK57.00) - Growth slowed, margins improved

Q4 sales and EBITA were below our estimates, mainly driven by lower volumes in surgical, consumer and telecom end-markets. However, Medical Solutions’ EBITA margin rose QOQ and YOY, supporting a potential continued margin recovery. We reiterate our BUY but have edged down our target price to SEK57 (59).

Nolato (Buy, TP: SEK59.00) - Expecting a fairly uneventful Q4

We expect the Q4 report to show a sequentially stronger EBITA margin despite weak telecom and consumer end-markets weighing on Integrated Solutions, indicating that Q3 marked an EBITA margin trough. We reiterate our BUY, but have lowered our target price to SEK59 (61) as we have cut our 2024e EBITA by 6%, mainly reflecting FX headwinds from an appreciating SEK.

Nolato (Buy, TP: SEK61.00) - Q3: the free cash flow show

Q3 net sales and EBITA were lower than we expected, driven by lower volumes from in-vitro diagnostics (IVD), surgery and vaporising heating solutions (VHP). However, a working capital release triggered strong FCF conversion. We reiterate our BUY but have reduced our target price to SEK61 (65).

Nolato (Buy, TP: SEK65.00) - Improved ESG profile

During Q3, Nolato announced a consolidation of its factories in China and lower sales from tobacco-exposed vaporising heating solutions (VHP), and, with Medical Solutions now the dominant segment, we believe the group is set for a more stable growth trajectory through lower cyclicality. We reiterate our BUY, but have cut our target price to SEK65 (67).

Northern Lights

Nolato (Buy, TP: SEK67.00) - Slight headwinds, but OK overall

Q2 net sales missed our estimate by 4%, while EBITA undershot by 11%, fuelled by lower VHP sales, which we believe comes with negatives and positives. We still believe Nolato could be back to YOY earnings growth in H2. We reiterate our BUY but have cut our target price to SEK67 (70).

Nolato (Buy, TP: SEK70.00) - Prescription for growth

While we do not expect the Q2 report to yield any significant news, we believe it should provide further reassurance, as an increased share of revenues and EBITA from Medical Solutions should provide a more stable growth trajectory. We have only slightly adjusted our estimates, and we reiterate our BUY and SEK70 target price.

Swedish Small - caps - summer 2023

Swedish Small - caps - summer 2023

Nolato (Buy, TP: SEK70.00) - Headwinds fading

Nolato’s Q1 net sales were 6% above our estimate and EBITA was 7% above, driven by organic growth in Medical Solutions and Industrial Solutions. We believe former headwinds from 2022 could be fading and see Nolato being back on track for earnings growth in H2e. We have upgraded Nolato to BUY (HOLD) and raised our target price to SEK70 (60).

Northern Lights

Nolato (Hold, TP: SEK56.00) - Integrating lower 2023 guidance

Q4 revenue and EBITA were below consensus as Integrated Solutions missed revenue guidance by c20%. However, Medical continued to expand, with 9% organic growth YOY (23% including FX). We reiterate our HOLD and SEK56 target price but have cut our 2023e revenue by 5% and EPS by 8%.

Nolato (Hold, TP: SEK56.00) - Continued headwinds expected

With a difficult Q1–Q3, Nolato has been under pressure in 2022, and we expect Q4 to have seen further headwinds. We now include 2025 in our estimates, and reiterate our HOLD and SEK56 target price.

Northern Lights