Translation: Original published in Finnish on 6/17/2026 at 7:30 am EEST.

Oriola has strong market positions in growing defensive markets. We believe the company has the potential for a moderately rising earnings trend, but we also see the large investment projects in the coming years bringing risks. In addition, we believe that the associated company Kronans is overvalued on the company's balance sheet and poses a clear risk. On the other hand, structural changes could also unlock value for the company. We reiterate our Accumulate recommendation as the stock trades clearly below, e.g., our sum-of-the-parts valuation. We lower our target price to EUR 1.0 (was EUR 1.1) on the back of slightly decreased estimates. 

Oriola is a pharmaceutical distributor and wholesaler

Oriola is a company specializing in pharmaceutical distribution, wholesale of health and well-being products, and advisory services for the pharmaceutical market. Oriola also has a 50% ownership in Kronans, a pharmacy chain operating in Sweden, which is reported as an associated company. Oriola's revenue mainly comes from Finland and Sweden. In both countries, Oriola controls about half of the pharmaceutical distribution market, so its market position is very strong, and it is difficult for new competitors to enter the market. The company's revenue grows fairly steadily with the market, and the aging population in particular will continue to support the growth of the pharmaceutical market. From the perspective of market positions and market growth, we believe Oriola's situation and outlook are positive.

Major investment projects underway

Oriola is undergoing a group-wide IT system renewal that will last until 2027. In addition, it is building a new distribution center for all its Finnish operations, which is scheduled to be commissioned during 2028. The purpose of these projects is to enhance the company's operations and improve profitability. However, we believe the benefits are still a few years away, and along the way, major changes may cause operational challenges. We have taken this into account in our 2028 forecast, where we expect the transfer of the logistics center to cause a drop in earnings.

We do not expect the company to reach its targets

The company updated its financial targets in spring 2026 for the strategy period ending in 2029. The key targets are at least 5% revenue growth and a cost-to-revenue ratio below 75% (i.e. adjusted EBITDA over 25%). We believe the revenue target is credible, as the company's historical growth and the market's projected growth for the coming years are both around 4%. This is also our growth forecast, which is thus slightly below the target. The target horizon for profitability is rather short, considering the commissioning of the new logistics center during 2028. We expect profitability to remain roughly at the current level of 17%, excluding a weaker performance in 2028. The company also aims to pay out around two-thirds of its earnings as dividends, while simultaneously strengthening its equity ratio.

We expect the associated company Kronans' earnings to improve from a weak level in the coming years, but its value to still be significantly lower than Oriola's book value For 2026, the company’s guidance is that adjusted EBITDA will grow. Our estimate (36 MEUR) is slightly above the comparison period.

We see value in the company, but also significant risks

Several factors complicate the assessment of Oriola's valuation multiples, and we do not consider the Group's earnings multiples (especially EV-based ones) to be directly usable. Our sum-of-the-parts and DCF values are EUR 1.7-1.8. Our target price is lower than the sum-of-the-parts valuation because we account for the risk of an impairment of the associate and a potential need for equity. In addition, the target price is weighed down by operational risks related to investments in the coming years, as well as the time required to unlock the company's value. We believe that divesting Kronans would significantly clarify the company's structure and enhance its value, even if it required strengthening the equity.