Redeye raises its Base Case after a solid Q3 report, which delivered organic growth, improved operating margins, and additional customer wins.

Redeye is encouraged by a solid quarter. Sales in the SDS core business unit grew 37% year on year and 11% organically – in line with expectations. Operating margins, however, exceeded forecasts and came in at all-time-highs.

Redeye maintains its positive outlook and makes some minor downward adjustments to near-term sales. The fundamentals remain unchanged, and our Base Case is SEK 72 per share. While sales were a bit lower than forecast, SDS reported its highest EBITDA margin to date (23%). In our opinion, this is a manifestation of the management’s ability to run an efficient business.

Redeye provides a brief comment on the preliminary figures for Q1 2021. Although sales were slightly below expectations, we are encouraged to see strong operating results, in line with our forecast. At this point, we do not expect to make changes to our forecast and valuation. We will return with a more extensive research note in connection with the publication of the actual report.