Translation: Original published in Finnish on 3/12/2026 at 8:00 am EET.

We raise Talenom's recommendation to Buy (was Accumulate) and revise our target price to EUR 1.8 (from EUR 1.9). The Q4 report did not contain any major surprises; Finland is performing very well given the circumstances, problems continue in Sweden, and growth continued in Spain. The stock is under significant selling pressure and investor confidence in the company is low, which is why there is little buying interest. However, a new era is beginning as the company returns to its roots, and we believe the valuation is attractive with a one-year horizon.

The last quarter was confusing in terms of figures

Talenom's revenue from continuing operations in Q4 was 24.4 MEUR (+1.9% y/y), slightly exceeding our estimate (24.1 MEUR). Revenue developed slightly better than we anticipated in all operating countries. Comparable EBITDA was 2.3 MEUR, clearly exceeding our 1.9 MEUR estimate, which included 1.2 MEUR in non-recurring costs. Spain's result included some 0.5 MEUR of these expenses, and in terms of profitability, Q4 still fell slightly short of our expectations. Profitability in Finland was very good even during a seasonally weak period and exceeded our expectations, but both Sweden and Spain were disappointments. In Spain, development was largely in line with our expectations without the aforementioned, partly questionable, one-off costs. Sweden's figures were weak, and the company has continued to adjust its cost structure, but in our view, turning the tide will not be easy.

Comparable EBIT in Q4 was -1.2 MEUR, which is practically on par with the comparison period (Q4'24: -1.3 MEUR). We consider the weak Q4 performance understandable, as the organization and management were largely focused on the demerger. The dividend proposal was "up to" EUR 0.05 per share, in line with our forecast, but EUR 0.03 will be paid normally after the AGM, and EUR 0.02 will be subject to the board’s later discretion. We now have a clearer picture of new Talenom's balance sheet structure since the turn of the year, with Easor as a discontinued operation. The level of debt is high, but in our opinion, the cash flow is at a healthy level relative to the amount of debt. This will be confirmed as the year progresses.

No major changes in estimates

Talenom reiterated its guidance, according to which 2026 revenue will be approximately 110-120 MEUR and comparable EBITDA approximately 18-22 MEUR. Our own estimates (114 MEUR and 20 MEUR) are relatively in the middle of the company's provided range, and the changes we made to the figures were moderate. In Finland, Talenom has been able to grow even in a very challenging market situation, and profitability is strong, even though additional costs come with a separate listed company and growth investments have been increased. In Spain, the company is growing both through acquisitions (3 MEUR of acquired revenue) and organically, but there is significant uncertainty regarding profitability after costs "got out of hand." The situation in Sweden remains challenging, and although the company estimates EBITDA to be positive in 2026, we remain cautious about this for now. There are also small positive signs in Sweden, as the staff has responded positively to the strategy change, and the steps forward are clear.

There is also an up lever in the valuation

Talenom's international business is currently weakly profitable in Spain and performing poorly in Sweden, but both operations still hold value. Therefore, we primarily use a sum-of-the-parts analysis in our valuation, which leads us to our target price of EUR 1.8. Roughly 71% of the value is based on Finland, about 20% on Spain, and about 9% on problematic Sweden. High financial leverage creates a huge valuation range between positive and negative scenarios, but if the new strategy and management succeed, currently shunned Talenom also has significant upside leverage. Additionally, when looking at cash flow, we believe the valuation is already quite attractive even with 2026 forecasts, despite earnings-based valuation multiples remaining high.