Translation: Original published in Finnish on 10/1/2026 at 7:58 am EEST.

We raise our target price for Scanfil to EUR 14.00 (was EUR 12.50) and reiterate our Accumulate recommendation for the company. We slightly increased the company's growth estimates on the heels of the Capital Markets Day (CMD) and lowered our required return for the share by one notch. Although the stock is currently highly valued in the short term, we believe that the expected return consisting of strong, revenue-driven earnings growth outlook and dividends remains cautiously attractive in light of our updated forecasts.

Direction and pace were in line with our expectations in Q2

Scanfil held a CMD event this week at its Cortona plant in Italy. We believe the company is well-positioned to accelerate growth in the coming years as Scanfil's offerings appear strong, particularly for larger, more stable companies, and the market structure, which will remain fragmented for a long time, enables acquisitions to continue. While it is improbable that Scanfil will achieve the top-tier relative profitability of its peers in its focus segment, the company's adjusted EBITA margin of 7%, which is quite reliable and close to the lower limit of its target level, also leads to a value-creating return on capital employed of around 15% with the company's current balance sheet. Additionally, the company's customer structure can deliver a relatively more stable and predictable level of revenue, which, in our view, compensates, at least in part, for the limits that the margin places on the volume-based valuation of the share.

We tweaked our growth estimates slightly upwards

Based on the CMD and slightly increased inflation expectations (incl. energy-intensive raw materials), we raised the company's short- and long-term growth estimates. We now expect organic growth to be in around 5–7% in the coming years. Although the company did not break down its 15% growth target, we estimate that approximately half of the target should be generated through more asset-light organic growth. Similarly, achieving this target on the inorganic side necessitates an average of 1–2 acquisitions per year, considering that Scanfil is primarily looking for targets with revenue in the 50–150 MEUR range. However, we do not forecast any acquisitions. Estimate revisions for the coming years were minor because the investments required to accelerate growth and inflation will, in our view, keep the adjusted EBITA margin stable at just above 7%. Our long-term earnings estimates rose slightly, in line with growth estimates. We forecast Scanfil's adjusted EPS to grow by around 15% by 2028, driven by the acquisitions made, a gradually recovering economic situation, and organic growth enabled by project wins. The main risks to our forecasts relate to external demand factors driven by the global economy, the smooth functioning of the supply chain, and acquisitions. Internally, we feel that Scanfil is in good shape.

Valuation is still cautiously attractive

Based on our estimates for 2026 and 2027, Scanfil's adjusted P/E ratios are 17x and 14x, while the corresponding EV/EBITA ratios are 13x and 12x. Next year's multiples are slightly above the company's moderate 5-year medians. The 12-month expected return, consisting of earnings growth, a downside in multiples (Q2’26 LTM P/E 19x), and a dividend yield of 2%, slightly exceeds our required return. Relative to our DCF value as well, the share still has a slight upside, as we lowered our required return (WACC) slightly due to the likely gradual improvement in the use of the balance sheet. We also emphasize that, even with the new debt target, we believe the company remains sufficiently conservative in terms of debt leverage, and therefore we do not believe this change will increase the stock’s risk level.  Relatively speaking, Scanfil is undervalued by about 10–30% compared to global contract manufacturers, but the peer group is, of course, already expensive following the price correction caused by the AI boom. Consequently, in our view, the overall valuation picture supports the cautious purchase of additional shares in a company riding a tailwind, even though the historically high, volume-based valuation (2026e: EV/S 1x) leaves no room for missteps or a decline in sector valuations (including the sustainability of the AI rally).