In this financial report, analyst Adrian Olsson and Axel Natt och Dag take a closer look at the Swedish market research company Novus Group. Novus has successfully managed to expose more of the business towards the profitable private sector which, according to the analysts, motivates a revenue CAGR of 11.2% in 2021-2023E and an EBITDA margin of 15.7% in 2023E. Through peer-valuation a target P/E multiple of 8.4x is motivated, resulting in a target share price of 7.1 SEK and a potential upside of 27.4%.
Investment highlights:
- Successful change of strategy towards the private sector which, through increased cross-selling, drives both revenue and margins.
- A more valuation in line with other business to business consultants is motivated as Novus increases their product portfolio.
- Cyclic valuation with all time high valuation in July every election year since 2008.