Translation: Original published in Finnish on 07/27/2026 at 07:10 am EEST

We cut our target price for Incap to EUR 9.00 due to significant negative estimate revisions following the profit warning issued by the company on Friday and an increase in the required return (was EUR 12.0). However, we reiterate our Accumulate recommendation for the stock, as its valuation has been trampled to a very low level despite the estimate cuts (2026e: EV/S 0.7x, EV/EBIT 7x). Incap will publish its Q2 report on June 30.

The second reason for the profit warning was a cold shower

On Friday, Incap issued a profit warning regarding its adjusted EBITA for the current year. However, the revenue guidance still remained within the previous range. According to the company, its revenue this year will be 270-290 MEUR (previously clearly higher) and adjusted EBITA 26-29 MEUR (previously clearly higher). In practice, “clearly higher” means an increase of 20-40% in Incap’s guidance. Last year, Incap achieved an adjusted EBITA of 26 MEUR on a revenue of 215 MEUR. The profit warning is quite strong, as the new guidance indicates only 0-12% growth for adjusted EBITA (incl. the Lacon acquisition). The reason for the warning was “margin pressure in certain market segments and global material availability”. The profit warning was not a surprise to us as such, as we recognized the risk already after the weak Q1. The scale of the warning and especially the underlying reasons related to margin pressure were a disappointment. To our knowledge, other contract manufacturers have not reported margin pressures recently. Nor can the problem be immediately classified as transient. In connection with Incap's Q2 earnings release next week, our main focus will be on the root causes of margin pressure and their persistence.     

We clearly cut our estimates throughout the forecast horizon

As the profit warning left the structural margin risk open, we took a significantly more cautious stance on our near-term margin estimates before the Q2 report, which will hopefully shed light on the situation, and cut the company's adjusted EBIT margin estimates by about 1 percentage point. In addition, we slightly lowered our growth estimates, as material availability challenges may cause at least delays in deliveries. Due to the revisions, our adjusted EBIT estimates for Incap decreased by around 15% across almost the entire forecast horizon. We now expect Incap's revenue to grow by 31% this year to 280 MEUR and adjusted EBIT by 4% to 26.8 MEUR. Revenue growth is driven especially by the Lacon acquisition and organic growth turning slightly positive in H2. In practice, we estimate that margin pressures and raw material availability will keep Incap's earnings in organic decline for the fourth consecutive year, as we believe Lacon's inorganic contribution to the operating result is somewhat positive. In the coming years, we estimate the company will be able to grow organically at a rate of around 6-10% due to a gradual economic recovery and certain customer wins. However, we now expect the company's adjusted EBITA margin to remain at around 10%, which is clearly lower than the company's profitability in previous years and only slightly higher than the best peers. We now expect Incap's revenue to grow by 34% to 74 MEUR in Q2 and adjusted EBITA by s5% to 6.7 MEUR.

Valuation has been trampled low

Incap’s adjusted P/E ratios for 2026 and 2027 based on our estimates are 11x and 10x, and the corresponding EV/EBIT ratios are 8x and 6x. We believe the multiples are cheap, although the EV/EBIT multiple is doomed to remain in single digits until the organic earnings growth trend of recent years reverses and the prevailing uncertainties ease. The relative markdown of the share is significant, and the volume-based premium that traditionally guaranteed high margins for the company has also completely melted away (2026e: EV/S 0.7x). The DCF value also supports a positive investment view on the share, even though we significantly increased our model's required return after the unfortunate profit warning.