OMDA (Buy, TP: NOK35.00) - Profitability needed

We have trimmed our 2024–2026e sales ahead of the Q3 results, partly offset by Predicare, and increased our opex estimates, as cost reductions are set to take longer than we expected. Given the company’s financial position, we believe profitability is needed to avoid a liquidity risk. Still, we continue to expect organic growth and the cost focus to drive earnings momentum. We reiterate our BUY, but have cut our target price to NOK35 (40) to reflect more cautious estimates.

OMDA (Buy, TP: NOK40.00) - Growth over margins near-term

Although missing our Q4e EBITDA, the company appears to be focusing its efforts on growth, in response to strong customer demand. For 2024, we thus forecast organic growth of 9% YOY, but an EBITDA margin of 28% (below the targeted 30%), as we expect the continued strong organic growth to drive a temporary headwind to underlying profitability margins. Still, we continue to expect organic growth and the cost focus to drive earnings momentum, and thus reiterate our BUY and NOK40 target price.

OMDA (Buy, TP: NOK40.00) - Demand set to require higher costs

While we continue to expect solid organic growth and a sharp improvement in the EBITDA margin to 25% in Q3, we have raised our 2024–2025e opex on our expectation that Omda will need a somewhat larger workforce to meet customer demand. Thus we reiterate our BUY, but have cut our target price to NOK40 (53).

Northern Lights

CSAM Health (Buy, TP: NOK53.00) - Delays in cost reductions

Q2 organic growth was a solid c11% YOY (constant currency), in line with our estimate, but above its guidance of 5–10%. However, EBITDA missed our estimate, due to slower than expected cost reductions. We continue to expect strong organic growth and increased profitability 2023-2025e, and reiterate our BUY, but have cut our target price to NOK53 (55) on somewhat higher opex estimates from delayed cost reductions.

CSAM Health (Buy, TP: NOK55.00) - Solid recurring revenue growth

While organic growth (6% YOY) was affected by tough comparables in licence sales, there was a substantial step up in recurring software revenues (c15% organic growth YOY). We expect Q1’s stronger than expected recurring software revenue to drive higher YOY organic growth in 2023e and thus reiterate our BUY; we have raised our target price to NOK55 (45).

CSAM Health (Buy, TP: NOK45.00) - Cost reductions in progress

Apart from a currency tailwind, we have made minor updates to our revenue estimates, but have slightly raised our 2023–2025e COGS and opex, as we forecast a slightly slower pace for the announced cost reductions. However, we continue to expect higher operating profitability as CSAM Health fully integrates its acquired companies and finalises its cost-reduction initiatives. Thus, we reiterate our BUY and NOK45 target price.

CSAM Health (Buy, TP: NOK45.00) - Higher profitability on the horizon

We have made only minor estimate revisions ahead of the Q4 results, increasing our Q4e opex on a higher number of FTEs, but we have not included any non-recurring opex related to the restructuring. We continue to expect higher operating profitability as CSAM fully integrates its acquired companies and finalises its cost-reduction initiatives. Thus, we reiterate our BUY and NOK45 target price.

CSAM Health - Initiation of coverage - Mission-critical software leade...

CSAM Health (CSAM) is a leading provider of specialist healthcare software in the Nordics. Through its mission-critical offering, attractive underlying market, and solid M&A track record, we expect CSAM to be positioned for continued organic growth and increased profitability. We believe this is not priced in, and thus initiate coverage with a BUY and NOK50 target price. Moreover, we see further upside potential if the company executes on its stated M&A strategy.