Netum extensive report: Building blocks of a turnaround are being laid

Translation: Original published in Finnish on 03/25/2026 at 06:56 am EET

Netum is an IT services company with a broad service offering that still focuses on the Finnish market. Historically, organic growth and profitability were at the top of the sector, but recent years have been challenging, albeit better than the sector average. Last year, Netum implemented several changes to adapt its structure and lay the groundwork for returning to profitable growth. This year, we expect it to lag behind the sector but to return to its level in the coming years. There is still uncertainty about the timing and trajectory of the turnaround, though the sales situation appears more positive. Thus, the stock's risk/reward ratio does not yet encourage investors to jump on board (2026-27e EV/EBITDA and P/E are ~11-9x). We reiterate our Reduce recommendation and EUR 1.1 target price.

Public sector expert proficient in the entire IT life cycle, where the private sector customer base has been strengthened

Netum's offering covers practically the entire IT lifecycle, from consulting to digital service development, cybersecurity, data expertise, integration, and continuous services. Due to its small size, some service areas are still relatively thin.  The company has a small product business with good long-term scalability potential. In our view, the most valuable areas of the service offering are continuous services and integration-related expertise, as well as, more recently, data and analytics expertise. These capabilities improve competitiveness and the prerequisites for establishing strategic partnerships. They also distinguish the company from pure project companies. By customer sector, the strength has always been in the public sector (~70% of revenue), but the private sector customer base has strengthened through acquisition.

Finland put in order before internationalization

The main changes in the 2025-27 strategy period were a stronger industry focus in the private sector and internationalization. We feel a more precise industry focus is natural because it is based on the company's strengths, improves expansion opportunities, and creates strategic partnerships also in the private sector. In the short term, we are cautious about the Nordic expansion, as Netum also has a turnaround to execute in Finland, and a leveraged balance sheet leaves little room for M&As. We find acquisitions and internationalization realistic at the very end of the strategy period.

We expect the company to return to earnings growth in 2027 

Netum's financial targets for the 2025-2027 strategy period anticipate average organic growth of ~10% and an EBITA % of at least 12%. We estimate significantly more moderate growth (estimate -7% and 0%) and profitability (estimate 6-7%) for the company in 2026-2027 (2025 -13% and 6%) compared to the company's targets. The company must continue to succeed in sales, so that revenue can return to growth as quickly as possible and new efficiency measures can be avoided. The company's broad and competitive service offering, good customer satisfaction, and the moderate targeted margin level provide a good foundation for this. However, we estimate that the company will distribute less dividend than targeted in the coming years and will primarily use funds to strengthen its leveraged balance sheet and then for acquisitions. The key risks relate to a prolonged crisis in the Middle East and its effects on the economy, new customer acquisition, and price competition, i.e., whether new contracts can compensate for the old, favorable contract base. In the big picture, it would be important for the company to succeed in its goals and thus restore investor confidence. This is because numerous disappointments have eroded confidence, even though performance has not been that weak compared to the sector.

The risk-reward ratio does not yet encourage jumping on board

Netum's investment profile is that of a turnaround company. The uncertainty of the earnings turnaround is relatively high in terms of timing and trajectory, which makes the risk/reward ratio unattractive, even though the valuation is not particularly tight in absolute terms (2026-27e adj. EV/EBIT rat ~11-9x). We find the expected return, consisting of the dividend yield and moderate earnings growth we estimate, to be below our required return on equity. Based on acceptable valuation multiples and the cash flow model, we estimate the fair value of the share to range around EUR 0.9-1.3 per share.