The uncertainties regarding tariffs have not diminished during the months following the escalation as the trade talks are still underway. Vaisala’s Americas business grew over 60% y/y in Q1 ahead of the escalation of the trade war. According to our talks with the management, the performance was only marginally influenced by front-loaded demand ahead of the tariffs. In addition to the trade war, the policy changes in the US create additional uncertainty especially for W&E. Vaisala’s traditional growth market within the W&E segment—renewable energy—is encountering headwinds, and the outlook has been revised downward as the market is now expected to contract in 2025. While we expect that this is mostly related to slower wind investment globally, the policy changes in the US likely partly explain the weakening demand picture. In addition, the cuts on public spending in the US overall have had negative effect on W&E as the client base is predominantly public.
Some topline headwinds yet mix continues to improve
We have made slight estimate revisions ahead of the Q2 print. We continue to model growth for IM in Q2 as we expect continued momentum in power, life science and industrial instruments markets. For W&E, we have revised our net sales estimate downwards and now forecast sales decline for the quarter as the segment faces tough comparison figures in addition to headwinds related to renewable energy and the trade war. In addition, we model some additional headwind from FX on a group level, as USD has continued to weaken. Profitability is expected to remain supported by a favorable sales mix, as we model both organic and inorganic growth in subscription sales. Our estimates for FY stay relatively unchanged as we estimate net sales of EUR 598m and EBITA of EUR 97m for the full year.
ACCUMULATE (prev. BUY) with a TP of EUR 54 (EUR 52)
We raise our TP to EUR 54 (prev. EUR 52) mainly on higher peer multiples. Vaisala is currently priced at EV/EBITA of 19-16x based on our estimates for 2025-2026E. Given the more neutral valuation, we revise our rating to ACCUMULATE (prev. BUY).
