Doro delivered strong results in its first quarter reporting without Careium. Sales came in 1% above our expectations, driven especially by sales growth of 14% in the Nordics. Most impressive, however, was the profitability. EBIT came in very strong at SEK 51m (ABGSCe SEK 29m). This was a result of a strong gross margin of 39% (ABGSCe 35%) and a lower cost level from the initiatives incorporated through the restructuring programme, but was also driven by NRIs such as delays in recruiting personnel that left with Careium. We view the opex in Q4’21 as especially low and expect the costs to rise to more normalized levels.
Estimates largely intact other than slightly higher EBIT
We keep our sales estimates intact but raise our EBIT estimates slightly. We do not expect the costs related to, for example, recruiting to be fully normalized in Q1’22e. However, we only make small revisions since Q1 and Q2 historically are the weakest quarters. Moreover, we slightly raise our EBIT margin for 2023e, since we have become more confident that Doro will be able to deliver high single digits. To summarize, this results in increases of 2.9% and 2.5% in ‘22e and ‘23e EBIT, respectively.
Currently trading 60% below peers
On our updated estimates the share is trading at EV/EBIT of 6.8x-6.5x for ’22e-‘23e, corresponding to 61% and 44% below peers. However, we think a gap of -35% to -65% is justified due to Doro’s declining market outlook. We raise our fair value range slightly, to SEK 26-40 from SEK 24-38, based on our estimate revisions.
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