Translation: Original published in Finnish on 10/15/2026 at 8:10 am EEST.

We revise our target price to EUR 4.6 (was EUR 4.8) and lower our recommendation to Reduce (was Accumulate).  Although Orthex's valuation appears moderate based on normalized earnings, prolonged inflationary pressures on plastic raw materials have weakened the short-term outlook and the stock's expected return within a 12-month period. At the same time, we believe that the need for price increases driven by inflation pressures makes achieving growth in the rest of Europe, which is critical to the investment story, more difficult.

Leading Nordic consumer goods company

Orthex is a leading Nordic household and consumer goods company. It has three main brands (Orthex, SmartStore, and GastroMax) and one side brand (Kökskungen), under which it offers products in different use categories (e.g. home storage, food storage, kitchen utensils, plant care, home and garden). Around 90% of the products are manufactured in the Nordic countries in Orthex's three highly automated factories. Nearly 80% of revenue comes from the Nordic countries, but the company has customers in more than 40 countries. The distribution channels for the products are mainly large European retail chains. Orthex's primary target market in Europe is worth approximately 4 BEUR and consists of sales of home and food storage solutions and kitchen utensils. Orthex is the Nordic market leader in home and food storage.

Confidence in the ability to grow must be earned back

Orthex's long-term financial targets include organic revenue growth in excess of 5% and a comparable EBITA margin in excess of 18% over time. Outside the Nordic countries, the aim is to grow by more than 10% per year with existing and new key customers. Except for its IPO year in 2021, the company has not achieved its growth target even once during its time on the stock exchange. The comparable EBITA, which averaged 12% in 2020–2025, has remained well below the company's target. Nevertheless, the business is clearly creating value, supported by efficient capital turnover. The challenging demand environment in the Nordic countries and two inflation shocks in recent years have naturally made it harder to achieve targets, but after repeated gap years, the company is certainly under pressure to convince the market of its ability to deliver sustainable growth.

In our estimates, the company's revenue will grow by an average of 4% per year in 2026-2028, initially driven by price increases but also by a strengthening demand environment. The scalability of the cost structure allows for improved relative profitability in our estimates, and we forecast that the recovery of the operating margin to 12%, together with growing revenues, will drive significant earnings growth in the coming years. However, achieving earnings growth within a one-year timeframe will be difficult due to prolonged price pressures on plastic raw materials.

Balancing short-term risks and long-term potential

Orthex's earnings-based valuation (2026e P/E 14x, EV/EBIT 11x) is somewhat elevated, even though the dividend yield enables a short-term return of around 5%. However, it is difficult to identify other short-term share price drivers for the stock given the ongoing conflict in the Middle East, and we expect the result to remain on a downward trend for the next 3 quarters, driven by prolonged cost inflation. Our DCF model indicates upside for the share and a value of EUR 5.4 per share. However, realizing this potential requires a recovery in revenue and strengthening relative profitability, which we believe will take time in the current cost-inflationary operating environment.