Riding on price tailwinds from Q2e

Solid Q1, but with adj. EBIT 3% below due to net recruitments. Fine-tuned sales, but '24e-'26e EBIT down 4-3% on higher opex. Share to benefit from improved organic growth: up to BUY (Hold).

Fortnox (Buy, TP: SEK85.00) - Set for acceleration quarters

We find Fortnox’s Q1 42% adj. EPS growth YOY impressive in light of the macro drag, limited price tailwinds, and step up in investments. In-line underlying results mean our 2024e adj. EBIT is broadly unchanged (-1%), leaving our 2024–2025e EBIT 7–11% above Bloomberg consensus. The choke point for bears was negative reported FCF, while we believe FCF adjusted for calendar effects and its lending business showed a 34.9% margin. We reiterate our BUY and SEK85 target price, and see potential trigger...

3% adj. EBIT miss on higher costs

Fortnox (Buy, TP: SEK85.00) - Guess who’s back

We view Fortnox as the best on the block with consensus underestimating its medium-term earnings power, and have upgraded to BUY (HOLD) on the share price weakness. The stock has dropped 12% since the strong Q4 report that counteracted most of the negative angles raised in a recent Financial Times article. We expect Fortnox to at least meet Bloomberg consensus in Q1 and see potential triggers for H2, with easier comparables, potential macro tailwinds, and traction in the Fortnox Card launch. We ...

Fortnox (Hold, TP: SEK75.00) - Best on the block, but range-bound

The strong Q4 demonstrated Fortnox’s hallmark scalability, with 100–155% EPS and FCF growth YOY and a 10% EBIT beat versus consensus, wrapping up the short case. We believe its underestimated medium-term earnings power offers potential for a~20% IRR, but that most of the positives for 2024e (price rises and growth from new products) are already priced in, and it still faces tough YOY comparables for H1. We have edged up our target price to SEK75 (74), but given the lack of short-term potential u...

Swedish small caps

Swedish small caps

Fortnox (Buy, TP: SEK74.00) - Defensive high growth in 2024e

Short interest has increased to 7.2% of the free float and the main dispute between bulls and bears is if Fortnox can reach 2024 consensus. We believe its products and growth opportunities are more significant than bears appreciate, yet the execution to realise this might prove more difficult than bulls understand. The bar is now more modest, and we see Fortnox as a top sector pick based on its defensive high-growth exposure. We reiterate our BUY and SEK74 target price.

Fortnox (Buy, TP: SEK74.00) - Resetting growth expectations

Our visit to Fortnox’s HQ reinforced our view that ~30% organic growth YOY in 2024 is achievable, equally split between new customers, usage and pricing. For the stock to regain momentum, we believe Fortnox needs to at least beat consensus; hence we have reset our growth expectations for the coming quarters, and lowered our 2023–2024e EPS by 2–10%. We still see an attractive entry point given the recent drop in the share price (below pandemic-low valuation) and the long-term outlook (underestima...

Fortnox (Buy, TP: SEK81.00) - Set for Q3e consensus beat

Despite investor focus on the weaker macro backdrop, we expect Fortnox’s Q3 results to beat Bloomberg consensus, factoring in lower opex intensity givenits shifted revenue growth mix. We believe its 30%+ organic growth YOY at expanding margins is more multi-faceted and durable than most believe, given its market dominance, pricing power, and untapped monetisation potential, with core bookkeeping representing only 15–20% of sales. We reiterate our BUY but have lowered our target price to SEK81 (8...

Northern Lights

Fortnox (Buy, TP: SEK83.00) - Q2 strong all around

Fortnox’s Q2 results were strong, notably its customer intake, financial services growth, and 40% FCF margin. We see the recent share-price pullback as attractive and expect the company to continue to demonstrate defensive high-growth characteristics at expanding margins, given its dominance in financial administration software and untapped monetisation potential. We reiterate our BUY but have lowered our target price to SEK83 (85).

Northern Lights

Fortnox (Buy, TP: SEK85.00) - Trend justifies recent rally

While many technology companies have been forced to downsize and hit the brakes, Fortnox has been able to keep its foot on the gas. We believe investors have rewarded Fortnox’s stock YTD and expect it to continue to demonstrate defensive high-growth characteristics with expanding profitability in its Q2 results, given the company’s dominance in financial administration software and untapped monetisation potential. We reiterate our BUY and SEK85 target price.

Fortnox (Buy, TP: SEK85.00) - Thesis intact

From the Q1 results, we were encouraged by: 1) ARR growth of 50% YOY (17% QOQ); 2) an incremental margin of 48%; and 3) FCF adjusted for its lending business growing by 90% YOY, underpinning its compounding dynamics and ample margin expansion potential. Despite the shares’ strong performance YTD (+49%), we remain bullish on Fortnox as one of the few software stocks with financials that should improve YOY despite concerns about a softer macro environment in 2023e (36%+ organic growth YOY at 42% E...

Fortnox (Buy, TP: SEK85.00) - Second consecutive price increase

We expect Fortnox to see 33% organic growth YOY at a 42% EBIT margin for 2023, which should ease investor concerns about weakened macro and SME exposure. The recent price increase has led us to raise our 2023–2024e EPS by 4–15%, and we continue to like Fortnox's under-monetised platform opportunity. We reiterate our BUY and have raised our target price to SEK85 (78).

Northern Lights

Northern Lights

Fortnox (Buy, TP: SEK78.00) - Climbing the ‘wall of SME worry’

Fortnox referred to its accelerating 52% EBIT growth YOY in Q4 as a “stable quarter”. We still believe the stock offers defensive high-growth exposure, a superior financial profile, and low estimate risk despite macro headwinds affecting its SME customers, given the mission-critical nature of its offering and under-monetised platform opportunity. We reiterate our BUY and have raised our target price to SEK78 (68).

Northern Lights

Fortnox (Buy, TP: SEK68.00) - Still a preferred name

Fortnox remains among our top picks in software, offering defensive high-growth exposure, a superior financial profile, and low estimate risks given 1) a low price point for customers at SEK223/month to access mission-critical ERP software; and 2) its durable opportunity to scale with existing loyal customers via its holistic platform offering. We reiterate our BUY and SEK68 target price.