As Swedencare had already announced, its financial targets were under review after the M&A activity seen in 2021. While the old target assumed organic growth of 20-25% and only a slight M&A addition (to SEK 2bn in sales by 2025), the new target assumes ~20% organic growth going forward (which would result in SEK ~3bn in sales) and an M&A addition of SEK ~1bn. Hence, while the target is prolonged by one year, the organic growth target is left relatively unchanged with the upside to the target derived from M&A. Looking at the last year, Swedencare has seen a significantly higher M&A pace than the firm guides for in future. Given the leads it is generating, we would expect the company will see significantly more M&A opportunities than SEK 1bn in sales over the next five years. As such, Swedencare will either exceed the five-year target of SEK 1bn in acquired sales or become more conservative in its execution.
Financial target implies a ‘26e EV/EBITDA of 14-15x
The raised financial targets imply ‘26e EBITDA of SEK >1200m. Including M&A (assuming M&A multiples of 10x), the new target implies a multiple of ~14-15x on 2026e EV/EBITDA or an EV/EBITA multiple of 15-16x. On our current estimates, (which are relatively in line with the financial targets when it comes to organic growth), the share is currently trading at a ‘22e-‘23e EV/EBIT(A) of 58x-47x, ~60% above global animal health peers.
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