Translation: Original published in Finnish on 8/17/2026 at 7:00 am EEST.

We reiterate our Accumulate recommendation and EUR 4.2 target price for Teleste. The company's Q2 figures were fully in line with our expectations in terms of key figures, and we have only made minor adjustments to our forecasts. In our opinion, Teleste has good prerequisites to continue earnings growth in both of its businesses in the coming years, in light of which the stock's valuation (2026e P/E 10x) is very moderate. Our extensive report published in July can be read here.

Revenue developed in line with our expectations

Teleste's Q2 revenue decreased by 3% to 34.7 MEUR, which was in line with our expectations. Networks segment revenue declined by 13.5% to 19.6 MEUR (our forecast -7%), reflecting delayed orders due to the ongoing merger of Cox and Charter. In Europe, DOCSIS 4.0 orders developed strongly, which was reflected in the growth of received orders (25.6 MEUR, +8%) from an already strong comparison period. Public Safety and Mobility's revenue grew by 14% to 15.1 MEUR, while our estimate expected 5% growth. However, the segment's received orders decreased by 32% year-on-year to 10.8 MEUR, and the order book (86.5 MEUR) declined by 10% year-on-year. However, quarterly fluctuations in revenue and orders are explained by factors related to project timing. Teleste expects several significant new projects from its existing customer base during H2, leading to a clearly strengthening order intake.

Earnings met our expectations

Teleste's adjusted EBIT landed at 1.9 MEUR in Q2 (Q2'25: 2.2 MEUR) and was fully in line with our estimates. The Networks segment's adjusted operating profit (10.4% vs. Q2'25: 12.5%) weakened from a strong comparison period, reflecting lower volumes and investments made. Public Safety and Mobility's profitability (8.1% vs. Q2'25: 4.0%), on the other hand, improved significantly from a soft comparison period. Teleste's efficiency measures implemented in recent years are now clearly showing results as volumes increase. The company believes there is still room for improvement in profitability in the coming years.

Earnings expectations are particularly weighted towards Q4

As expected, Teleste reiterated its outlook and guides for revenue of 140-160 MEUR and an adjusted EBIT of 7-10 MEUR for this year. Regarding the outlook, the company clarified that earnings are still expected to be weighted particularly towards Q4. This is due to the merger of Cox and Charter, as well as the timing of deliveries to the largest customer (Alstom) in Public Safety and Mobility. The merger of Cox and Charter appears to be nearing completion, and with it, orders could be expected to normalize towards the end of the year. At the same time, Teleste also expects another major customer (Rogers) to complete its destocking, with order flow to Teleste increasing towards the end of the year. The strengthened development in Europe also seems to compensate well for the softer short-term development in North America. We only made slight adjustments to our estimates based on the Q2 report. We now expect revenue of 143 MEUR and adjusted EBIT of 8.9 MEUR for this year.

Moderate valuation and continued earnings growth make risk/reward attractive

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 10x and a corresponding EV/EBIT ratio is 8.7x. We consider these levels to be moderate, as Teleste's medium-term earnings potential is still higher than this year. The value of our DCF model (EUR 4.7) also indicates an upside, and our estimates are still below the company's targeted level.