* Q3e: Medical stable, but negative seasonality * EBITA estimates cut by 2-3%, mainly for Engineered * Share trading at 14x '26e EV/EBITA Q3e: stable Medical, but a seasonal drop in margins We expect Nolato will report Q3 net sales of SEK 2,324m, down 3% y-o-y, of which +1% is organic growth. We expect muted organic growth in Engineered (-2%), while we expect demand in Medical will hold up better (+4%). We noted German medical peer Gerresheimer's profit warning on 8 October, which saw its share slump 18%, but its Q3 organic growth of -1% does not worry us much as 1) the historical correlation with Nolato Medical's organic growth is only 0.25, and 2) Gerresheimer largely blamed weak cosmetics demand, which is an end-market exposure Nolato does not share. On margins, as usual, we expect a seasonal down-tick in Q3, for an EBITA of SEK 265m and a margin of 11.4% (9.8% in Q3'24, 11.6% in Q2'25). EBITA cut by 2-3%, mainly for Engineered Solutions At the group level, we cut EBITA by 2-3% for '25e-'27e. This stems mainly from top line-driven downgrades in Engineered Solutions, as we see subdued demand from industrial end-markets in the coming quarters. Updated FX assumptions also account for 1pp of our EBITA cuts. 14x '26e EV/EBITA, slower margin expansion ahead Despite raising its EBITA margin target from 10% to 12% as recently as in March, Nolato is already just 40bp off its new target (as of Q2'25), as it has reported impressive sequential margin expansion of 90bp in Q1 followed by another 60bp in Q2. As such, we believe the pace of expansion should be slower ahead, as much of the improvement potential discussed at the CMD has been realised. We model the group EBITA margin going to 11.8-12.0% in '26-'27e, and on our estimates, the share is trading at 14x '26e EV/EBITA (5Y median 15x), while offering lease-adj. FCF yields of 5-6% for '26e-'27e.
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