* Continued soft demand and hourly prices
* '26e-'27e EBITA down 3%
* Trading at ~5x NTM EV/EBITA, ~30% below peers
Expectations for Q4'25
B3 Consulting Group will publish its Q4'25 report on 19 February. We expect sales of SEK 343m, implying 2% y-o-y growth, which is supported by M&A, although held back a little by an organic decline of 3% and FX headwinds. This is in line with the market data, suggesting continued soft demand and a negative net recruitment trend across the IT consulting market. We also expect EBITA of SEK 16m, corresponding to a margin of 4.6%. We have cut Q4e EBITA by roughly 20%. One half of the cut is due to slightly lower sales on account of somewhat weaker demand, and the other is due to a slightly weaker profitability profile that is due to a continually weak operating environment for IT consultants.
Estimates down slightly
For '26e, we expect demand conditions to remain muted, with relatively low visibility. That said, hourly prices are unlikely to remain a headwind, and net recruitment is now more likely to turn positive. Therefore, we cut '26e-'27e sales by 3-2% and EBITA by ~3%. Pricing discussions have resumed, although we expect hourly rate increases to materialise only once demand improves, likely in late 2026.
Valuation
On our revised estimates, B3 is trading just above 5x NTM EV/EBITA, which is ~30% below current peer multiples. In addition, the company is trading ~35% below its historical EV/FTE multiple, indicating that it is currently expected to generate lower earnings per consultant than historically. We continue to view the current margin weakness as cyclical rather than structural, and not representative of a steady-state margin for the next five years. The near-term outlook for IT consultants continues to be soft, but we see potential for improvement in H2'26 due to positive net recruitment and an environment in which hourly prices don't decline.