Berenberg starts Norva24 with 'buy,' cites growth prospects

Norva24 AB (publ)

01/08/2024 12:08

** Berenberg initiates coverage of Norva24  NORVA.ST  with a
"buy" rating, price target of SEK 38, seeing "a pipeline for
growth" for the underground infrastructure maintenance (UIM)
services provider
    ** The brokerage believes the group could benefit from an
increase in demand driven by the poor overall condition of
underground infrastructure in the group's largest markets and
growing capacity requirements
    ** It highlights that about 75% of Norva24's revenues are
recurring, while stricter regulations could increase frequency
of mission-critical services
    ** Berenberg sees the group's revenue growth potential at
mid-teens percentages (including acquisitions), and forecasts
about 7% revenue compound annual growth rate (CAGR) in 2024-2026
    ** As Norva24 continues to consolidate the fragmented UIM
market, its inorganic growth could reach double-digit
percentages, the brokerage adds
    ** Also, in Berenberg's view the group has reached an
inflection point; it forecasts Norva24 adjusted EBITA margin to
improve from the 11.0% in 2023 to 12.8% in 2026
    ** Out of five analysts that cover the stock, four rate it
"strong buy" or "buy", and one rates it "hold"

 (Reporting by Marta Frąckowiak)
 ((marta.frackowiak@thomsonreuters.com))