Translation: Original published in Finnish on 04/27/2025 at 10:07 pm EEST

We revise Evli’s target price to EUR 20.0 (was EUR 21.0) reflecting slightly decreased estimates. We still consider Evli a clear long-term winner in the sector, and the earnings growth outlook in the coming years remains good despite short-term market uncertainty. The stock offers a good expected return at the current level and we reiterate our Accumulate recommendation.

A strong start for the year

Evli’s Q1 revenue was 27.7 MEUR and slightly higher than our 26.6 MEUR forecast. The revenue overshoot came from non-recurring income, and thus its significance is marginal. The recurring fees, which are critical to the strategy, were fully in line with our forecasts. EBIT was also slightly above our estimate, but due to the weaker mix, the significance of this is also neutral. The lower lines of the income statement were a clear disappointment, as minority interests were significantly higher than we expected. Minority interests have been remarkably high for two quarters in a row now, which raises concerns about the normal level. We continue to believe that the item will be lower than in previous quarters and we will closely monitor its development in the coming quarters. Wealth Management's performance was strong overall and its figures were in line with our expectations. New sales performed excellently considering the circumstances, and Evli's Q1 sales were clearly among the best of the companies we cover.

No major changes to estimates, long-term earnings growth outlook is strong

Evli noted that the market is very uncertain and in a delicate state, but at the same time, the situation seems relatively calm among customers. Thus, new sales have not frozen in the same way as, e.g., during the COVID crisis. We only made small negative estimate changes. The biggest single change is the decline in the earnings share of the associated company Allshares for the coming years, as we expect it to invest more heavily in growth than before. This year, Evli’s earnings will decrease from the excellent level of the comparison period, especially due to decreasing performance fees. In 2026, the company should return to brisk earnings growth, and starting from 2026, we expect earnings growth of approximately 12% p.a. Broad-based growth in Wealth Management and improved cost efficiency drive the earnings improvement.

Our dividend forecasts have remained almost unchanged. For 2025, the dividend exceeds the reported result. However, in recent years, the company has emphasized the importance of a growing dividend in its communications, and we believe that the company will maintain a symbolic dividend increase next spring as well. In terms of the balance sheet, the company can afford this.

Good expected return if earnings return to growth

We believe Evli is undeniably one of the long-term winners in the financial sector. Evli’s product and service offering is of high quality, and we believe that Evli's broad product portfolio is an excellent fit for the current market situation. In the long term, the company has excellent prerequisites to continue its strong value creation. Considering these factors, we consider a valuation level of P/E 17-18x suitable for Evli. With the excellent 2024 earnings, the P/E is about 15x and with the forecasted 2025 earnings, it is around 17x, which is in line with our fair value range. With 2026 earnings growth, the P/E is 14x, which we find attractive given Evli’s high quality. In addition, the dividend yield is at a good level of around 6-7%. Overall, we see the stock offering a good total expected return, consisting of some 10% annual earnings growth and a 6-7% dividend. We note that without earnings growth, there is no upside in the stock and in this scenario, the expected return would only be based on dividends.