* Cautious Q4 guidance supports positive organic growth in 2027e
* CMD and potentially new targets coming up
* Adj. EBITA +1-3%, share now at 8.0x 2027e EV/EBITA
2027e organic growth support
Proact delivered a better-than-expected Q3 report on adj. EBITA, driven by a strong gross margin and lower opex. Segment-wise, Nordics & Baltics (NOBA) was the shining star again, now delivering >10% EBITA margin on a rolling 12-month basis. Delivery lead times are extending in the hardware market, smoothing out and increasing the tailwinds for system sales, in our view. The foundation for positive organic growth in 2027e now looks good, although the company guided for some caution into Q4 (due to potential delayed deliveries into Q1'27). Given that the margin now exceeds the financial target (>8%) both LTM and YTD (8.5% and 9.0%, respectively), we expect Proact to lift its growth targets, especially for NOBA. However, a margin focus remains in Central and West, and the temporarily soft Q3 in the UK should be of little worry given positive comments about the order book and the timing effects causing this.
Estimates raised slightly
We raise 2027e system sales' organic growth from -1% to 2% because of the strong order intake, extended lead times and increased growth ambitions. As a result of lower opex, we raise 2026-28e adj. EBITA by 1-3%.
CMD on 11 Nov
We look forward to the CMD on 11 November, at which we think Proact will talk about accelerating its organic growth targets vs. its historical performance while maintaining a solid margin profile. Combined with a capital allocation policy, there is a possibility that the current financial targets are replaced by an EBITA/share CAGR target, which would reflect the ambitions the company is trying to explain for the market, in our view. We estimate a 10% adj. EBITA CAGR 2026-28e, so a target of >10% would provide upside potential to estimates. On our updated estimates, the share is trading at 8.0x 2027e EV/EBITA.