Merus Power: Orders point to slowdown in growth

Translation: Original published in Finnish on 1/12/2026 at 8:21 am EET.

Merus Power's announced orders for 2025 do not support continued rapid growth in the short term, which is why we have reduced our forecasts, particularly for 2026. For now, relatively high valuation multiples and hard-to-predict earnings are putting pressure on the risk/reward ratio. The stock would look more attractive If the company could pull up a profitability turn-around and show that the internationalization of its energy storage business progresses sustainably. We reiterate our Reduce recommendation and lower our target price to EUR 4.5 due to estimate revisions (previously EUR 5.0).

Order development does not support continued strong growth in 2026

The company's revenue growth has been rapid in recent years, but according to our estimates, it appears to be slowing down in 2026 in the absence of major order announcements in H1. We estimate that the total value of orders announced by the company in 2025 would have been approximately 43 MEUR, which is a decrease of approximately 13% compared to the corresponding figure for 2024. We estimate the order book to be 30 MEUR at the end of 2025 (the same level as in 2024). According to our estimates, the lower order intake concerns energy storage systems slightly more than energy quality solutions, which is partly due to the strong comparison figures for energy storage system orders in 2024.

Slower growth does not preclude improved profitability

In light of weaker-than-expected order intake, we reduced our 2026 revenue estimate by 8%. We estimate that the company will be able to grow revenue by an additional 6% in 2026, provided that it experiences moderate sales success during the first half of the year. The EBITDA estimate decreased from 3.3 MEUR to 2.5 MEUR, which represents a relatively high decrease of 24%. Nevertheless, we anticipate an improvement in profitability compared to 2025, as the operations of the young, rapidly growing organization become more efficient. It must be noted, however, that deliveries to the new market in Poland will moderately increase the risk of cost overruns, as the new operating environment and different regulatory requirements may cause additional work or surprises in the first projects.

Strong growth expected to continue in the long term

Our long-term estimates changed more moderately, as we expect the company to return to rapid growth starting in 2027. Market demand for electricity storage is growing rapidly, though continued favorable trend also requires a pickup in renewable energy investments. In addition, Merus Power can accelerate growth by expanding sales to new markets. In fall 2025, the company received two small energy storage orders from Poland, marking an important strategic step in the internationalization of the energy storage business.

High valuation multiples require further evidence of profitability turnaround

Merus Power has successfully capitalized on the rapid growth of the energy storage market and multiplied its revenue since going public in 2021. If the company could raise its profitability closer to its target (EBITDA 15%), we believe that the share price would have considerable upside. However, we consider the industry to be highly competitive and to have low margins, so we believe that achieving the profitability levels we have estimated for the coming years would already constitute good performance (2027e EBITDA: 6.9%, EBIT 4.3%). Potential fluctuations in investment-driven demand also make determining a sustainable level of earnings difficult, which increases the investment's risk profile. The performance-based valuation is high due to the development phase (2027e EV/EBIT: ~18x). The risk-reward ratio is therefore not yet sufficiently attractive in the current situation. Evidence of a turnaround in profitability and stronger order growth could change the valuation picture in a positive scenario during 2026.