Translation: Original published in Finnish on 10/23/2026 at 08:00 am EEST

Source: Inderes

We revise our target price for Talenom to EUR 1.6 (was EUR 1.7) and reiterate our Bi recommendation. Q3 earnings beat our estimates thanks to strong profitability in Finland, and the profit turnaround progressed in Sweden, but development in Spain fell short of our expectations. Estimate changes remained relatively small, and estimates for the coming years were weighed down by rising interest rates. We estimate that next year will provide the long-awaited solid footing for valuation as international losses decrease.

Profitability exceeded expectations in Q3

Talenom's Q3 revenue grew by 3.6% to 25.4 MEUR, which was slightly below our 26.0 MEUR estimate (estimate +6.0%). Growth fell slightly short of our expectations across all operating countries, but the largest deviation was in Spain. Profitability, on the other hand, surprised us on the clear upside: comparable EBIT rose to 2.2 MEUR, whereas we expected it to remain on par with the comparison period at 1.4 MEUR. The earnings beat came entirely from Finland, where EBIT of 3.0 MEUR, driven by strong profitability, exceeded our estimate by 0.7 MEUR. However, comparable EBITDA improved across all operating countries: In Sweden, it slightly exceeded our estimate, while in Spain it fell a little short of expectations. In our view, the progress of the earnings turnaround in Sweden is critical for the goodwill risks on the balance sheet, but a sustainable improvement also requires correcting the downward trend in revenue. We feel cash flow in Q3 was reasonable, but Talenom's debt leverage is high (net gearing around 200%). The rise in interest rates is reducing the related leeway, and we estimate that the company will slow down its acquisition pace.

The earnings outlook for the coming years did not gain much clarity

Talenom reiterated its 2026 guidance: revenue of around 110-120 MEUR and comparable EBITDA of 18-22 MEUR. We believe that the upper limit of the guidance is practically out of reach, and we estimate full-year revenue to settle at around 112 MEUR. We expect comparable EBITDA to settle around the middle of the range (our estimate is 20.1 MEUR). Despite the Q3 earnings beat, estimate changes remained minor. We see more upward pressure on costs than before, as Talenom plans to accelerate investments in AI, sales, and marketing in Q4.

We made small negative adjustments to our estimates for the coming years. Our expectations for earnings growth in international operations have decreased due to weakening profitability in Spain and weak revenue development in Sweden. Finland compensates for most of the changes due to strong profitability. In addition, the rise in interest rates weighs on the bottom line, which has a negative impact on earnings due to Talenom's high debt amount.

Next year brings much-needed substance to the valuation

The value of our sum-of-the-parts analysis fell slightly to EUR 1.7 (previously EUR 1.9). We lowered our accepted valuation multiples for Finland and Spain, reflecting generally lower valuation levels and rising interest rates. For Finland, the change was mitigated by an increase in earnings forecasts. High financial leverage leads to a wide range between positive and negative scenarios but Talenom, which is out of favor, also has significant upside potential. Additionally, when looking at operational cash flow, we believe the valuation is already attractive with 2026 forecasts, despite high earnings-based valuation multiples. In our view, traditional multiples will also provide a viable and concrete basis for valuation next year (2027e P/E 14x) on the back of narrowing losses in international operations. We lower our target price to EUR 1.6. The new target price is below the sum of the parts (EUR 1.7) and the DCF model (EUR 1.8), reflecting the risks in Sweden, the challenges in Spain, and weak share sentiment.