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Proact: Hardware market to rebound in 2024e - ABG

Well positioned to regain growth from AI and cybersecurity
Adj. EBITA +1-3%, EPS +3-4% from completed buybacks
Share at 7.5x 2024e EV/EBITA, 30% below peers

A solid Q4 and an interesting 2024e coming up

Q4 was a solid quarter for Proact, with both better-than-expected system sales against tough comps (-11% organic growth vs ABGSCe -25%) and record-high cloud orders of SEK 197m, up 39% y-o-y, driven by broad demand across regions, which we find encouraging. Regarding 2024e, we think Proact is well positioned to gain from a recovering hardware market in line with estimates from Gartner and IDC (we estimate 7% organic growth in system sales in 2024e), and that increased demand from cybersecurity and AI should drive cloud revenues and services. To our understanding, Proact has a good position in backup solutions and disaster recovery, which are key services in conjunction with hacker attacks. All in all, we estimate 6% organic sales growth in 2024e with an improving margin from cost reductions made, driving adj. EBITA growth of 12%.
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