Translation: Original published in Finnish on 11/05/2026 at 09:15 pm EET

We raise our recommendation for Canatu to Buy (was Accumulate) and revise our target price to EUR 6.0 (was EUR 7.0). Since our H1 update, the share has fallen by over 30%, even though the company has not released any new negative information. In our view, Canatu's enterprise value (2026e 82 MEUR) has fallen to a very low level relative to the long-term potential of the company's technology. There is still a lot of uncertainty regarding the timing of growth for the coming years, but at the current share price, we see the risk/reward ratio as very attractive for risk-tolerant investors.

Price drop has not been based on company-specific news

Canatu's news flow has been light since the H1 report. In September, the company concluded its change negotiations, as a result of which it will dismiss a maximum of 14 employees. Following the H1 report, the company's management has bought shares for a total of around 0.2 MEUR. Industry news has been positive for Canatu, and, for example, ASML stated in its Q3 report that customer demand for EUV systems will exceed its planned manufacturing capacity in 2027-2028. The share has nevertheless declined steadily, while sentiment for semiconductor shares has weakened. We believe that the share price decline is primarily driven by a weakened appetite for risk, and the impact of individual larger sellers is strongly visible in the share price due to Canatu's share liquidity.

Canatu's earnings potential can only be properly examined in the 2030s

In our view, the growth targeted by Canatu requires three things to materialize by 2030. First, the deployment of the most efficient EUV devices must proceed, which is fueled by the demand for advanced chips, which is increased by artificial intelligence. Second, the current reactor customers need to obtain end-customer approvals for their membranes and proceed to mass production. At that point, the focus of Canatu's revenue will shift from reactor sales to recurring royalty and raw material revenue. Third, Canatu needs to win new reactor customers, and the company is constantly working toward this. In our view, FST's second reactor order is a concrete indication that progress is heading in the right direction. As recurring revenue grows, the company's business should scale strongly to profitability thanks to high gross margins. Our estimates rely on the realization of this path and bring Canatu close to its revenue target of over 100 MEUR in 2030. However, the timing of growth depends largely on customer production schedules, which Canatu can influence only a little. Therefore, in our estimates, the business will turn profitable only in 2029. A strong balance sheet means that net cash (H1’26: 71 MEUR) remains clearly positive throughout the forecast period. Canatu's very strong balance sheet is a key risk-mitigating factor for the investment story, as falling short of growth expectations would not immediately mean a new funding round that dilutes shareholders.

EV has fallen to a low level relative to its potential

Canatu's market capitalization is 139 MEUR, of which our estimated net cash position at the end of 2026 (58 MEUR) covers over 40%. The enterprise value is thus only around 82 MEUR, which we consider to be a very low level relative to the long-term potential of Canatu's technology. Multiples for the coming years (2026e EV/S 8.5x) remain high due to low revenue. As our estimates materialize, however, the valuation will quickly decline, and the EV/S and EV/EBIT for 2030 are 0.9x and 5.1x. Such multiples would be very low given the growth and profitability profile at that time. The value range of our scenarios remains wide at around EUR 3-14, but the current share price is closer to the pessimistic scenario. If Canatu'sgrowth story starts to properly materialize in the coming years, the share has the potential to multiply from its current levels. In our view, the current low enterprise value offers an attractive price to bet on the realization of this potential.