Q4e: Improving market outlook

Down to HOLD after strong share performance

Norconsult (Hold, TP: NOK48.00) - Taking a neutral stance

We have raised our target price to NOK48 (43). However, with our Q4 2024e and 2025e EPS broadly in line with Bloomberg consensus, and the stock looking fairly valued on 2025–2026e P/E, as well as trading at a premium to less liquid peers but at a discount to Sweco, we have downgraded Norconsult to HOLD (BUY). The Q4 results are due at 07:00 CET on 18 February.

Back to 10% run-rate margin

Norconsult (Buy, TP: NOK43.00) - Cost-driven low-season beat

While Q3s tend to be low season for Norconsult, the company beat our EBITA forecast and consensus on lower-than-expected costs. The billing ratio was below our forecast as new hires led to an FTE level 1.4% above our estimate, but costs were lower than we expected despite this. Overall, we have made minor forecast changes, but higher peer valuations have led us to raise our target price to NOK43 (42). We reiterate our BUY.

Better than expected Q3

Norconsult (Buy, TP: NOK42.00) - Q3 low season likely in line

Q3s are low season for the consultancy sector, due to the summer holidays. When Norconsult reports, due at 07:00 CET on 7 November, we expect no surprises, with our adj. EBIT (EBITA) broadly in line with Bloomberg consensus. We reiterate our BUY and have raised our target price to NOK42 (39) on increased peer valuations and lower financing cost estimates.

Overcapitalised and undervalued

Norconsult (Buy, TP: NOK39.00) - Q2 earnings beat, forecasts raised

Q2 revenues met our expectations, but with opex below our forecast, EBITA was better than we estimated. While the beat was partly due to bonus-periodisation effects, which should lead to deeper margin lows in low-season quarters, and vice versa in peak quarters, the underlying beat was driven by a solid billing ratio. We reiterate our BUY and have raised our target price to NOK39 (37).

Norconsult (Buy, TP: NOK37.00) - Focusing on Q2 billing rate

We have updated our quarterly estimates to better adjust for the Q2 2023 outlier effect, and reduced our 2024e EPS by 4.8%. However, as lower interest rates seem to have improved sentiment in real estate markets, we have marginally raised our 2025e and 2026e revenues on more FTEs. We still like the valuation and long-term growth prospects, especially the potential demand boost from the EU’s Energy Performance of Buildings Directive (EPBD), but politicians might remain hesitant to adopt this unti...

Norconsult (Buy, TP: NOK34.00) - Q1 earnings beat on cost control

Q1 EBITA beat our estimate and consensus on lower costs than expected as a result of scale benefits, while net revenue was a little soft, largely explained by the billing rate (NOK/day) rising only 2.1% YOY (missing our estimate by 3%) due to changes in the geographical mix. Reflecting the earnings outperformance and tight cost control, we have raised our 2024e EPS by c8%, 2025e by c4% and 2026e by c2%, and in turn our target price to NOK34 (31.5); we reiterate our BUY.

Norconsult (Buy, TP: NOK31.50) - Billing ratio in focus

With Easter in Q1, the billable working days in the quarter were 60 versus 65 last year. Thus, we expect a YOY drop in adj. EBIT of c55%. Our Q1 focus point is the billing ratio, with new hires in Sweden ramping up and Building demand in regional Norway levelling out as the main moving parts. For 2026, consensus EBIT seems too bullish, given few 2026e working days. However, the long-term story remains intact in our view, despite this potential consensus downside. We reiterate our BUY and NOK31.5...

Norconsult (Buy, TP: NOK31.50) - Solid Q4, attractive valuation

Q4 EBITA was above company-collected consensus and in line with our forecast on solid cost control, despite a weaker-than-expected billing rate. Management proposed a DPS of NOK1.2, above our forecast and consensus. We have marginally updated our 2024–2026e revenues on higher FTEs and an increased billing rate. We continue to find the valuation attractive, especially in light of Norconsult’s long and profitable growth track record. We reiterate our BUY and have raised our target price to NOK31.5...

Norconsult (Buy, TP: NOK30.00) - Solid Q4e revenue growth

We expect Norconsult’s Q4 headline results to be hurt by one-offs from the IPO during the quarter. However, the underlying results are likely to be strong, and we forecast net revenues up c15% YOY. We believe the 2024–2025e adj. EV/EBIT valuation remains one of the most attractive in the sector, and we reiterate our BUY and NOK30 target price.

Norconsult - Initiation of coverage - Quality at a discount

With two decades of profitable growth and among the highest (and most stable) EBITA margins within its sector, we see potential for Norconsult to trade at a premium to its peer-group average long-term. With its light balance sheet and healthy cash, as well as solid demand for its technical services given increasing complexity of projects and tightened ESG regulations, we initiate coverage with a BUY and NOK30 price target.