Christoffer Jennel and Aapeli have prepared a new company report on Eltel after Q2. 
Eltel’s Q2 report was weaker than expected across the board. Although profitability continued to improve year-on-year, the decline in revenue was somewhat unexpected, and the total order backlog remained low. Management cited customers’ continued slow decision-making and fewer orders within existing framework agreements during the quarter as reasons. On the positive side, Eltel is gaining a foothold in new and adjacent markets, and revenue from new businesses has more than doubled from the previous year. However, taking the Q2 report into account, we have revised our forecasts downwards, especially regarding profitability. Nevertheless, we believe that the company’s recently improved debt structure and steady improvement in profitability have lowered the company’s risk profile and warrant a lower cost of capital. The net effect of the changes had a positive impact on our fair value for the share. Considering the recent rise in the share price, we now estimate the risk-adjusted return over the next 12 months to be insufficient. Therefore, we lower our recommendation to Reduce (previously Add), but raise the target price to SEK 9.7 (previously SEK 9.0).