NYAB's Q3 results beat our estimates on both revenue and reported EBIT, driven by stronger-than-expected growth in Civil Engineering, particularly in Finland, where the Mikkeli data center project ramped up faster than we had anticipated. Order intake reached a record 555 MEUR, and even excluding NYAB's share of the Uppsala tramway, it exceeded our estimate, lifting the underlying Civil Engineering order backlog to a new record. Beneath the headline beat, however, the picture was more mixed. The Swedish margin fell short of our expectations, Consulting weakened further, and part of the EBIT beat came from a non-operational revaluation gain on the total return swap. Following Q3, we raise our revenue estimates by 2-3% while our earnings estimates are broadly unchanged. We raise our target price to SEK 9.5 (was SEK 9.2), but as the share price has risen clearly more than our estimates since our last update, we lower our recommendation to Accumulate (was Buy).

Finland drove a clear revenue beat, but segment margins were mixed

NYAB's Q3 revenue grew 27% year-on-year to 190 MEUR, clearly ahead of our estimate of 176 MEUR. As in Q2, the Civil Engineering segment drove the growth (+39% y/y), but this time Finland was the main source of the beat, with revenue up 126% to 47 MEUR (Inderes estimate: 33 MEUR) as construction at the Mikkeli data center ramped up. Consulting revenue declined a further 25% on continued weak demand for project personnel in the Norwegian offshore market. Excluding the Uppsala JV, the Civil Engineering order backlog reached a new record of ~580 MEUR (Q2'26: 502 MEUR). EBIT came in at 15.0 MEUR with a margin of 7.9% (Q3'25: 11.3 MEUR, 7.5%), above our estimate of 14.0 MEUR, but the beat sat entirely outside the operating segments. Adjusted for a ~1.7 MEUR revaluation gain on the total return swap, which we consider non-operational, EBIT was 13.3 MEUR (7.0%), so the quarter was a modest operational shortfall rather than a beat. Free cash flow of -7 MEUR was weighed down by the timing of a customer payment received shortly after the quarter, which we expect to reverse in Q4.

Revenue estimates up, earnings broadly unchanged

Following Q3, we have raised our revenue estimates by 2-3% for 2026-2028, while our adjusted EBIT estimates are broadly unchanged (2026e: -3%, 2027-2028e: +1%). In our view, the composition of the revisions matters more than the level. Finland moves up sharply on both volume and profitability, supported by a longer call-off runway at Mikkeli and a much stronger backlog going into the seasonally weak first half, while we lower our Swedish margin assumptions, as management indicated that ramp-up costs persist as long as the current growth rate continues. We also lower our Consulting estimates on both revenue and margin, where we see no near-term support for a recovery. At group level, these largely cancel out. As such, the upgrade is a volume and mix revision rather than a profitability revision. Our longer-term view is, however, intact. We continue to see NYAB as well-positioned for structural Nordic drivers in energy, infrastructure, industry and defense, and the conversion of Uppsala and Letsi-Svartbyn into execution contracts once again validates its Phase 1-to-Phase 2 model.

Upside has narrowed after the strong share price development

Following the strong share price development since our extensive report in early October (+10%), the earnings-based valuation for 2026-2027 (EV/EBIT: ~11x-9x, P/E: ~15x-13x) has moved closer to our acceptable valuation ranges (EV/EBIT: 10x-13x, P/E: 12x-15x), and on our 2026 estimates it already sits around the middle of the ranges we currently consider justified. As such, we believe a meaningful part of the multiple expansion we have anticipated has already materialized, and further upside now relies increasingly on NYAB delivering on our earnings growth expectations, where the mixed segment margins in Q3 show that this is not risk-free. Our expected total return over the medium term remains above our required return, albeit with a narrower margin than before, while our SOTP* and DCF model, at SEK 7.8-9.6 and SEK 9.52 (was SEK 9.24), respectively, indicate a more moderate upside. We continue to like NYAB's business model and positioning, but we see the risk/reward as more balanced at the current share price.

* Sum-of-the-part analysis