In this equity research report, analysts Daniel Leksell and Marcus Oscarsson take a closer look at LumenRadio, a Swedish company that offers wireless communication technology. The Company’s technology enables physical devices to communicate through an Internet of Things (IoT) solution that replaces the need for cables in critical business operations. Due to the increased emphasis on enhancing operational efficiency and finding more cost and energy-efficient solutions, revenue is estimated to grow at a CAGR of 26%, and EBIT margin is expected to rise from LTM 26.2% to 37.0% by 2027E. The target price of SEK 211.2 is based on an equally weighted average between a DCF and a peer valuation which implies an upside of 61%.
Investments highlights
- Highly sticky business model enables recurring revenues from OEM customers
- Margin expansion driven by scalability and revenue shift
- A rapidly growing market motivates a 26% revenue CAGR from 2023E to 2027E