Scanfil Q3'25: On a one-year horizon, the stock is appropriately priced

Translation: Original published in Finnish on 10/27/2025 at 8:07 am EET.

In our view, the overall picture of Scanfil's Q3 report published on Friday was fairly neutral and we did not make any material changes to our forecasts following the report. We reiterate our Reduce recommendation and EUR 10.50 target price for Scanfil. The company's outlook is positive in both the short and longer term, but in our opinion, the stock has adequately priced in the expected earnings growth (2026e: adj. EV/EBITA 11x). Thus, the 12-month expected return does not become attractive enough from the current valuation level within a one-year horizon. 

Revenue turned to growth in Q3 as expected

In Q3, Scanfil's revenue increased by 10% to 191 MEUR. Organically, we estimate that revenue declined by about 5%, as the SRX acquisition supported revenue by around 5%, or 8.4 MEUR.  In turn, FX burdened growth by just under 3 percentage points. Scanfil's adjusted EBITA rose in Q3 hand in hand with revenue growth by 10% to 14.1 MEUR. Profitability (adj. EBITA-%) was again in line with our forecasts and the comparison period at 7.4%. The figures did not quite reach our estimates, but there was no major drama involved in the Q3 development. The company sold new projects worth 72 MEUR in Q3, which was more than 30% higher than in the comparison period (incl. one large contract). We commented on Scanfil’s Q3 numbers in more detail on Friday here.

We did not make any forecast changes after the report

Scanfil reiterated its guidance of 2025 of 780-920 MEUR revenue and 55-68 MEUR adjusted EBIT. Repetition of the instructions was in line with our expectations, although the forks are very wide and the upper sides are optimistic. The company commented positively on the Q4 outlook, which is supported by new projects won in the last two years and the demand for investment goods in Europe also seems to be picking up slightly.

We shifted the completion schedules of the ADCO and MB acquisitions forward by a few weeks, which had a slightly negative impact on our Q4 forecasts. Otherwise, the forecast changes remained minor, as we had expected clear organic growth in the coming years, and the project profits, which are likely to convert into revenue quite slowly, did not cause pressure to change our forecasts (although the risk associated with the forecasts decreased slightly). We forecast Scanfil's adjusted EPS to grow by around 15% by 2028, driven by acquisitions, a gradually recovering economic situation, and organic growth enabled by project wins. The main risks to our forecasts relate to external demand factors such as the global economy. Internally, we believe the company is in pretty good shape, although the integration of two almost simultaneous acquisitions adds a notch to the risk level associated with the company's own operations in the coming quarters.  

We believe the share is roughly correctly priced

Based on our estimates for 2025 and 2026, Scanfil's adjusted P/E ratios are 16x and 13x, while the corresponding EV/EBITA ratios are 14x and 11x. In our view, the multiples for next year, which take into account the acquisitions and are partly dependent on the market situation improving, are neutral, so in the short term, we believe the stock's valuation is quite fully priced. Correspondingly, we believe that the expected annual return, consisting of earnings growth, the downside in multiples (Q3’25 LTM P/E 18x), and a dividend yield of just over 2%, remains unnecessarily modest. Also, when viewed against the DCF value, the upside in the share has been exhausted. Relatively, Scanfil is undervalued by approximately 10-20% compared to both global contract manufacturers and Nordic core peers. However, the global peer group and many Nordic peers are already priced at quite high levels and clearly above their medium-term averages. We are not entirely convinced of the sustainability of the situation in the longer term, so relative valuation continues to have a moderate weight in the formation of our view.