We do not expect the war in Iran to have a significant impact on Harvia. However, we expect Q1 earnings to be slightly below last year due to strong comparison figures. We expect Harvia to continue its strong growth and value creation in the coming years. As the valuation (e.g. 2026 P/E 21x) is at an acceptable level in our view, the stock offers a good expected return. We reiterate our Buy recommendation and EUR 44 target price.

We do not expect significant effects from Iran war for the time being

In our view, the effects of the war in Iran will primarily manifest as increased logistics costs for Harvia. However, we believe that Harvia, thanks to its strong pricing power, will be able to pass on higher costs to sales prices. The war may, to some extent, be reflected in deliveries in the Middle East, although we do not expect this to have a significant impact on the overall picture. We consider the biggest risk for the company to be a significant weakening of consumer demand. It is worth noting that in recent years, the sauna market has developed positively, especially outside Europe, even though overall consumer demand has been subdued. Thus, in our opinion, Harvia still has good preconditions to continue its growth trend.

We believe earnings will be slightly below the comparison period in Q1

We believe Harvia's Q1 growth will be slowed, similar to Q4'25, by a strong comparison period in the US, the weakening dollar, and to a small extent, the impact of the war in Iran on Middle East deliveries. Regarding the result, we note that the material margin in the comparison period was strong (over 66%), while the company's average level in recent years has been slightly over 64%, which we also forecast for Q1'26. As Harvia has systematically increased its fixed costs in recent years, we expect slightly weaker growth and a lower margin to also be reflected in the operating profit. We forecast adjusted EBIT to decrease from 11.9 MEUR in the comparison period to 11.4 MEUR. We estimate the margin to be around 21%, which is in line with the company's target level (above 20%), although Q1 is typically a seasonally strong quarter. We marginally cut our estimates (by about 1%) for the entire forecast period in this report.

In coming years, we expect progress to be in line with targets

Harvia's targets include annual sales growth of 10% (incl. acquisitions) and an EBIT margin of over 20%. We believe it will reach these targets in the coming years through organic growth alone. As in recent years, growth in our estimates is driven by non-European regions, with growth in the US, in particular, supported by the company's increased expansion in steam and infrared products. We believe this will allow Harvia to gain further market share in the US. We also believe that the growth of the APAC&MEA region will increasingly support the Group's overall growth as the region's share of revenue increases (11% in 2025). We also expect Harvia to maintain profitability at the target level of 20-22%. However, we estimate that growth investments will be reflected in the margin, which, despite strong growth, will not scale up significantly in our forecasts.

Valuation is attractive

This year's multiples (EV/EBIT 16x, P/E 21x) appear acceptable in our view, considering the company's quality and growth profile. We consider the company's return on capital and cash flow generation capabilities excellent, and multiples will moderate further in the coming years. We believe that Harvia’s capital allocation will continue to be value-creating, and thus channeling cash either to acquisitions or larger dividends would support the investor's expected return. The company hinted at the possibility of acquisitions in the near future, which we consider realistic in light of its strong balance sheet. We also see Harvia as a viable acquisition target.