Aiforia: Tightening the belt in preparation for the scaling phase

Translation: Original published in Finnish on 11/19/2025 at 7:00 am EET.

Aiforia's implemented cost savings will help manage its financing needs in the coming years while the turnaround of a strong customer base into accelerating revenue growth will take time. In our view, the value of the company's very strongly developing market position trades at a moderate level, even though the risks of delays in growth acceleration warrant postponing a more positive stance. Nevertheless, we believe the risk/reward ratio is attractive for risk-takers. We revise our target price to EUR 3.2 (previously EUR 3.4) following updates to our valuation scenarios and reiterate our Accumulate recommendation.

Cost savings help manage cash flow pressures

As a result of the change negotiations, Aiforia will terminate 8 employment contracts in Finland (employees as of June 30, 2025: 73). Including other savings, the company estimates that its actions will deliver annual savings of 2.5 MEUR starting in 2026. According to Aiforia, the changes aim to both cut costs and reshape the organization to better support business growth and sales. Based on the company's comments, we believe the changes are largely well-considered, though we see risks regarding maintaining the strong competitiveness of the product. Our previous comment on the change negotiations can be found here.

Aiforia is solidifying its position as a winner in the first wave of image analysis in clinical digital pathology

An investment wave in digital pathology is advancing, as the need for pathological analysis is growing and there is already a shortage of pathologists, which creates demand for solutions that increase efficiency and capacity. The target market for Aiforia's image recognition software, which makes image recognition in pathology more efficient, is young, and its competitive landscape is still taking shape. Nevertheless, Aiforia is already practically the market leader, having won the majority of new clinical customers in the sector, according to available public information. The company's position is bolstered by clear competitive factors, including efficiency gains from cellular recognition, deep learning models, and the sector's broadest clinical product portfolio.

Revenue growth takes longer to accelerate

We reduced our estimated operating loss for Aiforia by approximately 30% for 2026-27 due to cost savings. Our revenue forecast, in turn, was lowered to 4-10% for 2025-27 because we believe that the cost savings are also partly due to slower-than-expected growth in H2. Despite this, we estimate that, with the support of clinical customers, Aiforia's revenue growth will accelerate and reach an annual rate of 15-60% in 2025-28. We expect EBIT to turn positive in 2030. Before achieving profitability, we estimate that, at the current cash burn rate, the company's financing will only be sufficient until the beginning of Q2/2026. We expect Aiforia to carry out 10+10 MEUR share issues in 2026 and 2027. Given the strongest market position and customer wins in the sector, we believe that securing financing will be successful, albeit at an uncertain valuation. We expect revenue in 2030 to already be 30 MEUR (previously 31 MEUR, the company's target: >100 MEUR), which requires continuous new customer wins and successful implementations.

Risk/reward ratio remains attractive, but risk appetite is still needed

Aiforia's valuation (2025-27e EV/S 25-13x) relies on expectations of very strong and scalable growth. By pricing growth at various rates and confidence intervals, we can justify the company's value at a wide range of EUR 0.6-6.1 per share (previously EUR 0.6-6.3). Our target price has fallen slightly following the updated scenarios and is close to the midpoint of this range. Despite the moderate pricing relative to the range (EUR 2.62/share), the still-elevated risks associated with slow growth acceleration, as well as the resulting increase in financing needs and greater-than-expected dilution, argue for caution before pricing in the share's potential more strongly, in our view. Looking further ahead, we believe that the share offers an attractive overall return expectation due to its strongly developing customer base, which justifies taking on the high risks of the investment case.