NYAB's Q1 results came in below our estimates on both revenue and profitability. While the headline miss was meaningful, in our view the underlying read was more constructive than the print suggested, supported by very strong order intake and a record-high Civil Engineering order backlog. Looking ahead to the remainder of 2026, we expect revenue and earnings to be more H2-weighted as early-phase projects gradually transition into execution. Margins should show gradual improvement as production volumes pick up and operating leverage normalizes, although we adopt a more cautious near-term view on the Consulting segment. Management commentary regarding market conditions and the contract pipeline was reassuring, with no material changes to the outlook. The turbulent geopolitical backdrop during Q1 appears to have had minimal impact on operations to date, which is encouraging. Following Q1, we have made modest downward revisions to our 2026 estimates, while keeping our 2027-2028 estimates largely unchanged due to the strong order backlog. We maintain our Buy recommendation but lower the target price to SEK 7.8 (was SEK 8.0) on lowered short-term estimates.

Phasing weighs on Q1, orders point ahead

NYAB's Q1 revenue fell 6% (y/y) to 100 MEUR, below our estimate of 119 MEUR. The miss reflected a higher proportion of projects in early phases compared to the prior year, compounded by a colder Nordic winter (vs. last year) that weighed slightly on production. The Civil Engineering segment's revenue declined 5% y/y (Inderes est: +15%), with Sweden coming in materially below our forecast due to the higher share of early-phase work, while Finland surprised positively, although profitability was negative. Importantly, order intake was very strong at 183 MEUR (+23% y/y, book-to-bill 1.8x), and the Civil Engineering order book rose 27% y/y to a record 473 MEUR (Q4'25: 381 MEUR), materially strengthening visibility for the remainder of 2026. EBIT came in at 1.5 MEUR with a margin of 1.5% (Q1'25 adj: 2.5%), below our estimate of 3.4 MEUR (2.9%), where the miss was, in our view, primarily a function of operating deleverage from the lower revenue rather than deteriorating underlying project profitability. This view is supported by Civil Engineering Sweden, where the EBIT margin expanded y/y even on a lower revenue base.

We make modest downward revisions to 2026

Following the Q1 print, we have lowered our 2026 estimates to reflect the headline miss (revenue -2%, EBIT -5%) and a more H2-weighted phasing of the remaining year, while we have kept our 2027-2028 estimates largely unchanged, to reflect both the carry-over of postponed volumes and the structurally larger backlog composition. On margins, our downward revisions for 2026 are concentrated in the Consulting segment, where we now assume a more gradual recovery weighted toward late 2026, and the Finnish operations, where we adopt a more cautious near-term margin trajectory following the negative Q1 profitability. Our longer-term view remains intact, where we view NYAB as well-positioned to benefit from structural growth drivers in Nordic infrastructure markets, particularly the ongoing energy transition and grid modernization investments across Sweden and Finland. We believe that the key near-term catalysts lie in the potential Phase 2 awards for the Uppsala Tramway (447 MEUR) and the Svenska Kraftnät transmission line (136 MEUR), which management indicated could be signed around the end of Q2 or during Q3.

Upside hiding in plain sight

On our updated estimates, we believe the earnings-based valuation for this year remains at very attractive levels (P/E: 12x, EV/EBIT: 9x), especially on EV-based multiples, which account for NYAB’s strong balance sheet. Relative to our acceptable valuation ranges (P/E: 12x-16x, EV/EBIT: 11x-15x), we therefore see strong upside potential in the multiples, as we believe the market continues to undervalue NYAB despite a business model that delivers structurally higher margins and greater scalability than broader legacy providers. In addition, our expected total return over the medium term is also well above our required return for the stock. Further support for our view comes from our SOTP* as well as DCF model, which stand at SEK 7.6-9.4 and SEK 8.34 (was SEK 8.17).