* Q2 below expectations, largely due to temporary effects
* We cut our EBITA estimates by 3% for '26e, 1% for '27e-'28e
* Organic growth to accelerate in H2e, and M&A potential on top
Miss in Q2 driven mainly by temporary effects
Nolato reported Q2 adj. EBITA 3% below MFN consensus and an adj. EBITA margin 0.4pp below. However, both operating segments were either in line or above expectations on EBITA (Medical in line, Engineered +4%), while the miss was driven by above-average group costs that are expected to come down somewhat. Moreover, temporary effects from higher raw material costs weighed SEK -20m on EBITA (-0.8pp on the margin), and the effect is expected to be roughly half of this in Q3, and none at all in Q4.
Limited EBITA downgrades of 3% for '26e, 1% for '27e-'28e
Given the largely temporary nature of the factors that drove the miss, and in our view clear indications that margins should improve into Q3, we do not extrapolate the earnings miss. As such, our EBITA downgrades are limited to 3% for '26e and 1% per year for '27e-'28e.
Organic acceleration ahead with an M&A optionality
The company confirmed that commercial GLP-1 volumes have started from its new site in Hungary, and these will gradually ramp up to ~SEK 700m in sales over the coming few years, which we estimate will drive a ~3pp lift in organic growth. Meanwhile, management sounds more optimistic now regarding potential M&A, which would make sense considering the strong balance sheet, with r12m ND/EBITDA now at 0.7x. The share is currently trading at 13-11x '26e-'27e EV/EBITA, and offers FCF yields of 3%/6%/7% for '26e/'27e/'28e.