This report uses our new web format, currently in pilot. We're improving it, so tell us what you think!

We reiterate our Buy recommendation for NYAB and raise our target price to SEK 9.2 (was SEK 8.4), driven by higher estimates in connection with our extensive report update. NYAB is a specialized Nordic contractor in infrastructure, energy, and industrial construction that has continued to grow at a high pace despite an otherwise subdued construction market, as demand rests on multi-year public and private investment in grid, transport, industry, and defense rather than the broader construction cycle. In 2026, the company has converted early-phase positions into the two largest contracts in its history, extending visibility well into 2028. In our view, the current valuation does not reflect NYAB's growth, above-industry profitability, low capital intensity, and net cash balance sheet, and we see clear upside in the stock.

A specialized Nordic contractor spanning the full project lifecycle

NYAB develops, builds, and maintains infrastructure, energy, and industrial projects in the Nordics through two segments, Civil Engineering (~79% of 2025 revenue) and Consulting (~21%). Sweden is the largest market at around two-thirds of revenue, followed by Norway and Finland. From its roots in Luleå, the company has grown into a Nordic player through strong organic growth and selective M&A, reaching revenue of 547 MEUR in 2025 with a pro forma revenue CAGR of ~16% in 2021–2025. NYAB focuses on the value-adding phases of a project (project management, engineering, and the client relationship) and outsources most of the physical construction to subcontractors. Combined with a high share of partnering, hourly and framework work, and selective tendering, this lowers price risk in projects and has kept project write-downs essentially absent. NYAB has no residential exposure and increasingly wins large projects through early contractor involvement. According to management, the company has never won a Phase 1 without also receiving the execution order, a record most recently reinforced by the Uppsala tramway and Svenska kraftnät's Letsi–Svartbyn awards.

Earnings to outgrow revenue as margins widen

NYAB targets annual revenue growth of over 10%, an EBIT margin above 7.5%, net debt/EBITDA below 1.5x and a dividend of over 35% of net profit. Supported by a record Civil Engineering order book and favorable market conditions in Sweden, we expect revenue to grow at an 11% CAGR in 2026–2028. We expect the EBIT margin to improve to 7.2% in 2028 (2025: 5.6%) as higher-margin niches in rail, water and high-voltage transmission grow, which translates into ~20% annual EBIT growth over the period. We do not, however, model the margin target being reached, mainly because we are more cautious on Consulting margins and the softer Finnish market. In our view, the main risks relate to executing the record order book, overall project risk, the increased share of private-sector exposure, and customer concentration, with Svenska kraftnät and Trafikverket each accounting for over 10% of revenue. The asset-light balance sheet and strong cash flow support both bolt-on acquisitions and dividends clearly above the policy floor.

Valuation lags the quality of the business

On our estimates, NYAB trades at 2026–2027 EV/EBIT multiples of ~10x and ~8x and P/E multiples of ~13x and ~11x. In our view, these multiples are low relative to the quality of the business and sit at or below the lower end of our acceptable ranges (EV/EBIT 10–13x and P/E 12–15x), particularly on an EV basis. NYAB also trades at a discount to its peers, which we believe overlooks key structural differences in its business model. In our view, the company's strong growth, above-industry profitability, and capital-light balance sheet, which enables scalability and financial flexibility, warrant a moderate premium to peers rather than a discount. The expected return, consisting of multiple expansion and a dividend yield of ~2–3%, thus clearly exceeds our required return, and our DCF value, roughly in line with our target price, further supports the recommendation.