Translation: Original published in Finnish on 5/18/2026 at 7:00 am EEST.

Bioretec's Q1 results exceeded our expectations in terms of both revenue and earnings. Growth in the key markets of the United States and Europe compensated for a decline in the Rest of the World region, where the comparison period was boosted by an exceptionally large one-off order. Bioretec appears to be developing in the right direction, although due to limited visibility, it is difficult to precisely determine the future trajectory of growth. We are making moderate upward revisions to our estimates and, with these changes, are adjusting our target price to EUR 0.021 (was EUR 0.018). Our recommendation remains unchanged at Accumulate due to the positive development.

Revenue landed above expectations

Q1 revenue decreased by 12.6% year-on-year to 1.22 MEUR (Q1'25: 1.40 MEUR), but smashed our forecast of 0.85 MEUR. During the comparison period, a significant order was delivered to a Chinese distributor, against which revenue in the Rest of the World region decreased by an expected 58.8% to 0.49 MEUR. In contrast, European revenue grew by 203% to 0.43 MEUR, and US revenue grew by 449% to 0.29 MEUR. The company provided little commentary on the drivers of growth, but our interpretation is that the figures reflect the ramp-up of the RemeOs product family with an expanding customer and distributor network. Based on previous communications, RemeOs sales in Europe appear to finally be taking off, and the company has also reorganized its distributor network. The sales network in the US has also been growing. However, RemeOs sales were not reported separately, so a precise picture of the development cannot yet be formed.

Earnings surprised positively too

The Q1 EBIT was -1.44 MEUR (Q1'25: -1.29 MEUR), ahead of our forecast loss of -2.25 MEUR. EBITDA was -1.38 MEUR (-1.24 MEUR) against our forecast of -2.15 MEUR. The positive surprise is attributable to higher-than-expected revenue and a lighter cost structure. The company reported its adjusted gross margin for the first time, which was slightly above the target level (over 70%) at 70.1%. Starting in Q1'26, the company began reporting an industry-aligned adjusted gross margin, which improves comparability. Operating costs were clearly below our expectations, which can be explained by the weighting of US sales commissions towards the end of the year. The number of employees increased from 48 to 60, with a focus on strengthening sales in the United States and Europe. The number of employees remained unchanged compared to the previous quarter. After Q1, the company completed a rights issue, which generated 12.9 MEUR (gross). We estimate that the financing will be sufficient until Q3'27.

We are raising our forecasts

We are refining our 2026 revenue forecast upwards based on the growth rates in Europe and the US, as well as an expanded distribution network. We are keeping our revenue forecasts for 2027–28, which include strong growth, unchanged, as visibility for these years is still low. Our earnings forecasts for the coming years are rising due to higher revenue and our reduced cost estimate.

Valuation still attractive

The topline-based valuation is low relative to its growth and profitability potential: the 2026e EV/S is 3.2x and 2027e is 2.8x. Industry valuation multiples have decreased significantly worldwide during the beginning of the year, which has contributed to the increased attractiveness of stocks in the sector. The baseline scenario in our DCF model gives the stock a value of EUR 0.024.

Q1 increased our confidence in Bioretec's growth story. Visibility into the future is still quite low, which, together with the financial risk, keeps the stock's risk level quite high. However, due to the positive development and moderate valuation, we consider the risk-reward ratio attractive despite the uncertainties.