Translation: Original published in Finnish on 11/13/2026 at 8:10 am EET.

We reiterate our EUR 7.50 target price and Reduce recommendation for Koskisen. The company's Q3 numbers surpassed our lowered expectations from the preview, but, as we anticipated, a rapid turnaround in demand is not in sight. We have slightly softened further the rate of earnings improvement in our forecasts for the coming years as interest rates hinder the recovery of the construction sector, and cost levels remain high. In our view, the share price has already factored in a clear earnings improvement from current levels (2027e: P/E 14x), meaning the expected return remains modest at our target price horizon, even though the company could have strong earnings leverage when demand in the construction sector eventually recovers. 

Q3 was a mild defensive victory in relation to our expectations

In Q3, Koskisen's revenue increased by 8% to 90.7 MEUR, driven particularly by strong volume growth in the Sawn Timber Industry. Adjusted EBITDA remained flat at 2.9 MEUR. This result clearly beat the lowered forecast in our preview but fell well short of consensus estimates. The profitability of the Sawn Timber Industry was once again very unsatisfactory, but considering the difficult starting point, we view the figures as a mild defensive victory. The Panel Industry clearly improved from the low comparison figures, but the pace of the turnaround did not quite reach our expectations. From a cash flow perspective, the report was fairly good give the circumstances, and we believe Koskisen's balance sheet position is healthy. We commented on the company’s Q3 figures here yesterday.

We softened expectations for improving earnings further

Koskisen reiterated its guidance, according to which the company's 2026 revenue is expected to grow from the 2025 level and the adjusted EBITDA margin to be below the last-year level of 8.1%. Reiterating the very loose guidance was in line with our and the market expectation. The company's comments highlighted the very difficult operating environment, particularly for the Sawn Timber Industry and the chipboard segment, as especially inflation and rising market interest rates have delayed the construction sector’s recovery. In birch plywood as well, Europe's weak economic situation is dampening demand in the logistics sector. Additionally, the price of logs is high in Finland. In this challenging market, the company is focusing on efficiency measures.

Although the better-than-expected Q3 outcome slightly raised our EBITDA estimates for Koskisen this year, we lowered our estimates for 2027–2028 by around 4% (EPS -8–10%). We factored in around 2 MEUR in estimated annual savings from efficiency measures, but our estimates were weighed down more by the recovery in construction shifting further into the future, the continued high raw material and energy-based costs, and the slight changes we made to our product mix expectations. Meeting our estimates necessitates a gradual pick-up in construction and consequently easing pricing, savings, reaping the benefits of investments, and a partial abatement of cost pressures. Uncertainty regarding the timing of the recovery is high, as a recovery in demand would require falling interest rates, which the macroeconomic picture does not yet support. Our forecasts are clearly below the company’s target of over 15% EBITDA (2026e-2028e about 6-9%).

Clear earnings improvement already factored into the stock price

With our 2024 and 2025 estimates, Koskisen’s P/E ratios are over 70x and 14x and corresponding EV/EBITDA ratios are around 10x and 7x. The stock is therefore priced above our accepted ranges (P/E 10x-14x and EV/EBITDA 4x-7x) based on this year's multiples and within the ranges based on next year's improved yet still uncertain earnings level. The balance sheet-based P/B ratio of 1.1x is also sufficient in our view, as Koskisen has not exceeded its cost of equity since 2023. Consequently, the expected return, consisting of earnings growth, a significant valuation downside (Q3'26 LTM P/E over 60x), and a dividend of below 1%, remains unsatisfactory on a one-year horizon, even though the company could have strong earnings leverage as construction recovers. The DCF value (about EUR 8 per share) provides a slightly positive indication, but, in our opinion, this alone does not render the overall picture positive.