Translation: Original published in Finnish on 4/24/2026 at 7:00 am EEST.

Scanfil's Q1 figures, published Thursday, were slightly weaker than we expected, but we did not change our forecasts significantly for the coming years. The company's outlook is positive in both the short and longer term, but in our opinion, the stock has adequately priced in the expected earnings growth (2026e: adj. EV/EBITA 13x). Thus, the expected return for the year will not quite rise to a level that is attractive enough from the current valuation level. We therefore reiterate our Reduce recommendation and EUR 11.50 target price for Scanfil. 

Growth and earnings improvement were slower than we expected

Scanfil’s Q1 revenue grew by 19% to 229 MEUR but was 5% below our estimate. Growth was driven by the ADCO and MB acquisitions (14 pp) and 7% organic growth, but the shortfall of the forecast was likely due to the acquisitions' contribution. The Aerospace & Defense segment's 9% share was in line with our estimate. Scanfil’s adjusted EBITDA increased by 24% to 15.5 MEUR, but it fell short of our forecast due to lower volumes and a margin that remained at 6.8%. According to the company, profitability was weighed down by the ramp-up of new projects. Cash flow from operating activities was -2 MEUR due to the tie-up of working capital. Net debt/EBITDA rose to 1.6x, marginally exceeding the target, but the company's balance sheet is good as a whole. 

We did not make any forecast changes after the report

As expected, Scanfil reiterated its guidance for 2026 of 940-1,060 MEUR revenue and 64-78 MEUR adjusted EBITA. The market commentary was even surprisingly positive, and the escalating geopolitical situation does not appear to have much impacted Scanfil’s business so far (though demand is, of course, somewhat post-cyclical). We consider the lower ends of these guidance ranges particularly cautious compared to the pro forma levels achieved by Scanfil, MB, and ADCO last year, assuming no significant new geopolitical or general economic risks materialize.

Even before the report, however, our forecasts included a fairly positive scenario in which the company would reach approximately the midpoint of its revenue guidance and slightly above the midpoint of its earnings guidance range. Consequently, we did not change our near-term forecasts for Scanfil in response to the report, except for minor adjustments. However, the shortfall in Q1 and the rise in the tax rate for the current year reduced our adjusted EPS forecast for this year by around 6%. We forecast Scanfil's adjusted EPS to grow by around 15% by 2028, driven by acquisitions, a gradually recovering economic situation, and organic growth enabled by project wins. The main risks to our forecasts relate to external demand factors such as the global economy. Internally, we believe the company is in fairly good shape apart from some minor challenges in the German market, and we also believe the risks associated with integrating acquisitions have decreased slightly following the report.

We believe the share is roughly correctly priced

Based on our estimates for 2026 and 2027, Scanfil's adjusted P/E ratios are 16x and 14x, while the corresponding EV/EBITA ratios are 13x and 11x. The current-year multiples, which are the main focus, are about 15% above the company's own 5-year medians. Correspondingly, we believe that the expected annual return, consisting of earnings growth, the downside in multiples (Q1’26 LTM P/E 18x), and a dividend yield of just over 2%, remains unnecessarily modest. Also, when viewed against our DCF value, the upside in the share has been exhausted. Relatively speaking, Scanfil is undervalued by approximately 10–30% compared to global contract manufacturers and slightly undervalued relative to some Nordic peers. However, the global peer group and some Nordic peers are already priced at quite high levels and clearly above their medium-term averages. Consequently, we do not believe that peer valuation alone changes the overall neutral valuation picture.