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

We reiterate our Accumulate recommendation and EUR 4.2 target price for Teleste. The North American campaign of Teleste’s Networks segment is progressing well, and with a significantly expanded customer base, future growth rests on broader shoulders than before. This year, uncertainty is mainly created by the merger of key customers Cox and Charter, which is affecting the timing of orders, but in the big picture, DOCSIS 4.0 investments are continuing. In Europe, the market has simultaneously picked up after earlier caution, which Teleste benefits from due to its strong market position. New customers and efficiency measures in Public Safety and Mobility also support the continuation of profitable growth. Compared to the earnings growth outlook for the coming years, Teleste's share valuation (2026e adj. P/E 9.5x) appears very moderate.

North American expansion in Networks has progressed very well in recent years

In the Networks segment (2025: 60% of revenue), Teleste's years of work on North American expansion finally began to bear fruit last year, with revenue in the region growing by over 100% and already accounting for 31% of the segment's revenue. In addition to two significant frame agreements (Cox and Rogers), the company already has over 20 customers in North America. At the same time, the European market outlook has recently improved and will likely support Teleste's growth in the coming years, even though the long-term outlook is still gradually decreasing. However, expansion into North America is critical for long-term growth, and in light of the good development in recent years, the associated risk level has clearly decreased. Thanks to the efficiency measures taken, growth is now also reflected in Networks' margin (2025 adj. EBIT 10.1% vs. 2024: 7.9%).

Solid growth outlook for Public Safety and Mobility

In Public Safety and Mobility (2024: 40% of revenue), the order book (Q1'26: 90.8 MEUR), weighted toward passenger information solutions, is at a healthy level and supports the unit's stable growth outlook. The segment's expanded customer base, steadily growing market, and implemented efficiency measures provide a solid foundation for continued profitable growth. The good work in recent years in improving procurement and project management is reflected in the segment's adjusted EBIT margin rising to 6.0% last year (2024: 3.5%). We still see room for improvement in profitability, although margins are always under tight pressure in highly competitive major rolling stock manufacturer accounts.

Earnings growth continues this year

Teleste guides for revenue of 140-160 MEUR and an adjusted EBIT of 7-10 MEUR for this year. Earnings are expected to be weighted toward H2, which, after a strong Q1, bodes well for the full year's performance. We forecast revenue of 145 MEUR and an adjusted EBIT of 9.2 MEUR for the current year (6.4% of revenue). Teleste is targeting average revenue growth of over 10% in 2025-2030 and an adjusted EBIT margin of 7-12% by 2030. In light of the more efficient cost structure in recent years, we consider achieving at least the lower end of the profitability target to be realistic. Regarding growth, our estimates are still clearly more cautious than the company's targets.

Valuation looks very moderate for the coming years

After several challenging years, Teleste's investor story turned a new page last year, as earnings growth offered by the North American market began to materialize properly. With improved earnings performance, the stock's valuation already receives support from the 2025 realized earnings (EV/EBIT 11x). With our 2026 estimates, Teleste's adjusted P/E ratio is 9.5x and a corresponding EV/EBIT ratio is 8x. We consider these levels to be moderate, as Teleste's medium-term earnings potential is still higher than this year. Our DCF model (EUR 4.7) also indicates upside potential.