Translation: Original published in Finnish on 12/11/2025 at 10:07 pm EET.

We have reviewed our estimates following Sanoma's Capital Markets Day and updated financial targets. Our projections were in close alignment with the current targets as well, and the changes we made to our forecasts primarily affected Media Finland's medium-term estimates, as the opening of the gambling advertising market in 2027 will impact them. In our view, the share valuation is attractive relative to our earnings growth forecast for the next few years, so we are raising our recommendation to Buy (previously Accumulate) and reiterating our target price of EUR 11.3.

Our estimates are in line with revised financial targets

Sanoma updated its financial targets in connection with the Capital Markets Day. At the group level, it targets high single-digit adjusted EBIT growth in 2026-2030. As expected, Sanoma sees Learning's growth as a key growth driver, but it also expects Media Finland's results to grow, particularly thanks to the growth that will be brought about by the opening of the gambling advertising market.

In terms of revenue, Learning's growth is driven by market growth resulting from the timing of curriculum renewals in its largest operating countries (e.g., Poland and the Netherlands). In addition to revenue growth, Learning's earnings growth will be driven by improved profitability in line with reduced fixed costs, unit costs of learning materials, and investments resulting from the Solar efficiency program. Based on these drivers, Learning aims for high single-digit EBIT growth (measured annually by the CAGR-% for the previous three years). We forecast that earnings growth in 2026 will be relatively strongest compared to individual years (2026e operating EBIT growth excluding PPA +18%), as the starting level for the current year was lower. Overall, however, our earnings growth forecast for Learning is 8% in 2026-2028, which is in line with the target. 

Media Finland's earnings growth mainly stems from gambling advertising

Media Finland's target is stable revenue development as growth in digital subscription income is largely offset by the decline in print revenue. Despite this, Media Finland aims for low single-digit earnings growth through continuous operational efficiency improvements.  However, this target level does not include the expected revenue growth from the opening of the gambling advertising market, which Sanoma estimates at +20 MEUR. We estimate that this high-margin revenue will significantly contribute to the segment's earnings, leading us to project an average earnings growth of +7% in 2026-2028e. In line with recent estimates, we have shifted our growth expectations from gambling advertising to mid-2027 but raised our growth expectations generated by it starting in 2028, in line with updated market estimates. At the group level, changes in earnings forecasts for the coming years were only around +/- 1%.

Earnings growth drives expected return

Based on the previous 12 months' results, the share is valued at a P/E ratio of 16x and an EV/EBITA ratio of 11x. In our opinion, these valuation multiples are relatively neutral in relation to the risk level of the share. Consequently, the expected return for the coming years will be based on our earnings growth and dividend yield forecasts. The expected return on these investments exceeds 20%, making the stock's risk/return ratio highly attractive to us. Our view of the share's clear upside potential is also reflected in our cash flow model, which is valued at EUR 11.5.