Translation: Original published in Finnish on 02/16/2026 at 07:35 am EET

We reiterate our Accumulate recommendation for Teleste and revise our target price to EUR 4.2 (was EUR 4.1). Teleste's Q4 earnings were in line with our expectations, and the outlook for this year anticipates continued earnings growth as expected. The company's track record in conquering North America is constantly strengthening, and with a significantly expanded customer base last year, future growth also rests on broader shoulders than before. With a strengthening earnings trend and moderate valuation, we find the stock's risk-reward ratio attractive.

North America's growth was strong last year

Teleste's Q4 revenue (36.1 MEUR, -1%) fell short of our 37.9 MEUR estimate, but adjusted EBIT of 1.2 MEUR was still slightly better than our estimate (1.0 MEUR). However, the result was supported by proceeds from the sale of a single property at the end of the year, so the operational development was slightly softer than our estimates. This was affected by the deceleration by North America’s largest customer (Cox) in network investments due to the ongoing Charter merger. Broadband Networks' order intake (20.6 MEUR) decreased by 20% from a strong comparison period but increased significantly quarter-on-quarter (14.1 MEUR). Teleste's well-advanced expansion to North America is reflected in the fact that the region already accounted for 31% of Broadband Networks' revenue last year. Thus, according to our calculations, North American revenue grew by around 105% last year to 25.6 MEUR.

Public Safety and Mobility's revenue decreased by 2% to 16.2 MEUR, and our estimate also expected a roughly stable development. Teleste had several project deliveries underway at the end of the year, and according to the company, these have been very successful. The segment's order intake grew by 4%, and the order book (89.7 MEUR) is at a good level.

Earnings growth continues this year as expected

Teleste guides for revenue of 140-160 MEUR and an adjusted EBIT of 7-10 MEUR for this year. Our estimate was already within the given guidance range, and after minor adjustments, we now estimate revenue of 150 MEUR and EBIT of 8.8 MEUR for this year. Uncertainty in short-term development is introduced by the merger of Cox and Charter, which is expected to be completed by mid-year. However, Teleste already has over 20 operator customers in North America, so orders are continuously accumulating from a wider range of customers, diversifying the risk associated with the main customer. Particularly positive news in the Q4 report was that Rogers, Canada's largest operator, has chosen Teleste's intelligent amplifiers as part of its network solutions. In connection with this, the first orders were received already in December, and deliveries are expected to last for several years. Thus, this customer relationship appears to be developing into another very significant large customer alongside Cox. In addition, DOCSIS 4.0. deliveries will continue in Europe this year, although the investment wave is clearly smaller than in North America. The expanded customer base of Public Safety and Mobility and the implemented efficiency measures also strengthen the preconditions for continued profitable growth.

Valuation is moderate when reflecting the earnings growth outlook for the coming years

After several challenging years, Teleste's investor story turned a new page last year, as earnings growth offered by the North American market began to materialize properly. With improved earnings performance, the stock's valuation already receives some support from the 2025 realized earnings (EV/EBIT 12x). With our 2026 estimates, Teleste's  P/E ratio is 11x and a corresponding EV/EBIT ratio is 9.5x. We consider these levels to be moderate, as Teleste's medium-term earnings potential is still higher than this year. The value implied by our DCF model (EUR 4.6) also indicates an upside, and our estimates are still below the company's targeted level.