Carasent (Buy, TP: NOK27.00) - Strategic initiatives bearing fruit

Carasent reported accelerated growth (17% YOY in organic recurring revenues) and improved profitability in Q3, suggesting that its strategic initiatives have started to materialise, further substantiated by the milestone acquisition of Data-Al. While we have raised our 2025–2026e EBITDAC by 12%, we still see upside potential from further growth and cost synergies. Thus, we reiterate our BUY and have raised our target price to NOK27 (25).

Carasent (Buy, TP: NOK25.00) - On track

Our estimates are mostly in line with the company’s guidance, leaving room for further upside potential to our growth estimates as we forecast a minor uptick in underlying expansion from the existing business. Improvements in growth and profitability have already started to materialise, in our view, leaving Carasent well positioned for accelerated expansion and operating leverage. Thus, we reinstate a recommendation with a BUY and a target price of NOK25.

Carasent (No_rec, TP: NOK) - Recommendation and target price withdraw...

DNB Markets is acting as financial advisor to Carasent ASA in connection with EG’s contemplated voluntary cash offer to acquire all shares in the company (NewsWeb (oslobors.no)). As such, we have withdrawn our recommendation, target price and estimates.

Carasent (Buy, TP: NOK25.00) - Q4 in line; room for margin surprise

We have trimmed our 2024e revenue by ~1% following the Confrere divestment, and while we have raised our 2024–2025e gross opex by 3%, we see room for further cost reductions if organic growth does not accelerate, implying upside risk to our underlying margin assumptions. We still expect earnings momentum from the current growth initiatives and cost discipline, and thus reiterate our BUY and NOK25 target price.

Carasent (Buy, TP: NOK25.00) - Slower recovery on slower growth

We have lowered our 2023–2025e organic growth to 11–15% on lower consulting and platform revenues, and while we understand most of Carasent’s cost reductions took full effect in Q3, we see potential for further cost cuts if its growth initiatives fail to materialise. Despite the headwinds, we still expect growth initiatives and cost discipline to drive earnings momentum. Thus, we reiterate our BUY, but have cut our target price to NOK25 (28) on lower organic growth.

Carasent (Buy, TP: NOK28.00) - Profitability on the horizon

We have reduced our 2023–2025e organic growth on lower consulting revenues, and while we expect most of the announced cost cuts to materialise in Q3, we have raised our 2023–2025e gross opex on higher headcount estimates. Despite the headwinds, we still expect growth initiatives and cost discipline to drive earnings momentum. Thus, we reiterate our BUY, but have cut our target price to NOK28 (32) on lower operating profitability.

Northern Lights

Carasent (Buy, TP: NOK32.00) - Limited estimate revisions

We have only tweaked our 2023–2025 organic growth estimates, but have cut our 2023e gross opex as we now expect the cost-reduction measures to take effect sooner than previously. Despite the current organic growth headwinds, we believe the company’s growth initiatives and cost discipline leave it well positioned for accelerated growth and operating leverage. Thus, we reiterate our BUY and NOK32 target price.

Carasent (Buy, TP: NOK32.00) - Patients needed

Carasent reported slower organic recurring revenue growth in Q1 (13% YOY versus 15% in Q4), driven by weaker growth for Webdoc EHR. The slower growth was attributed to a catch-up in price adjustments from lower post-pandemic clinic activity. While we view this headwind as transitory, we have reduced our organic growth estimates as we expect tough comparables to continue into 2023. Thus, we reiterate our BUY but have cut our target price to NOK32 (35).

Northern Lights

Carasent (Buy, TP: NOK35.00) - Refocused growth strategy

We have made only minor revisions to our organic growth estimates, but have lowered our 2023–2025e gross opex on the announced cost-reduction programme. Despite the current headwinds for organic growth, we expect the new strategy to strengthen Carasent’s position in the Swedish market and set the company up for accelerated growth and operating leverage. Thus, we reiterate our BUY and NOK35 target price.

Carasent (Buy, TP: NOK35.00) - Returning to profitable growth

Given the announced slowdown in new hires, we have lowered our 2024–2025e opex, while we have raised our 2023e opex, driven by the recent new FTEs. Apart from this, our estimates are mostly unchanged. We continue to expect Carasent’s leadership position to drive profitable growth, with further upside potential from M&A. Therefore, we reiterate our BUY and NOK35 target price.

Carasent (Buy, TP: NOK35.00) - Focus on growth in core markets

We have lowered our 2022–2024e revenues on a slower intake of large clinics (our 2022e remains in line with guidance). Despite the current headwinds, we expect Carasent’s niche offering and business model to position it for continued above-market growth and operating leverage. Thus, we reiterate our BUY, but have reduced our target price to NOK35 (37) on lower organic growth than previously forecast.

Carasent (Buy, TP: NOK37.00) - Q3 better than expected

We have made only minor estimate revisions post-Q3, as capex was somewhat lower than expected. Revenues and EBITDA were in line with pre-announced figures and, while net retention was hit by tough comparables, clinic intake remains strong and M&A synergies are starting to materialise, paving the way for continued organic growth. We continue to see significant upside potential from possible further M&A; thus, we reiterate our BUY and NOK37 target price.

Northern Lights

Carasent (Buy, TP: NOK37.00) - Delays in sales processes

We have updated our model to include the acquisitions of Confrere and HPI, and lowered our 2022–2024e organic growth on weaker near-term guidance. Despite ongoing delays in sales processes with larger clinics, the growth outlook remains strong. Moreover, given Carasent’s healthy net cash position, we continue to see significant upside potential from possible M&A. Thus, we reiterate our BUY but have cut our target price to NOK37 (45) on lower organic growth than previously forecast.

Nothern Ligths

Carasent (Buy, TP: NOK45.00) - Positive signs in core markets

We have made only minor estimate revisions post-Q2, as investments related to new growth initiatives were somewhat higher than expected in Q2. Revenues were broadly in line with our estimate and, despite tough comparables hitting net retention, record-high clinic intake should drive accelerated growth. We reiterate our BUY and NOK45 target price.

Nothern Ligths

Carasent (Buy, TP: NOK45.00) - New markets on the horizon

Given positive indications from larger clinics, we expect clinic intake to pick up towards the end of the year. Thus, we have slightly increased our Webdoc subscription revenues from 2023e, while modelling somewhat lower revenues from platform services. Overall, our estimates are mostly unchanged, and we reiterate our BUY and NOK45 target price.