We reiterate our Accumulate recommendation for F-Secure and our target price of EUR 1.70. Operationally, the Q3 figures were in line with our expectations, and the specification of the guidance was also consistent with our expectations. Our forecasts remained practically unchanged, as we had already factored in the loss of the AT&T customer and the cost savings from the operating model changes. Looking ahead to next year, F-Secure’s valuation (EV/EBIT 8.3x) is very low. We believe the valuation will correct through earnings growth, which the company continues to pursue despite the loss of AT&T. In the short term, however, a significant setback could weigh on stock sentiment unless significant positive news emerges regarding the Tier 1 strategy.
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OP reiterates Buy and lowers target price to €2 (prev. €2.30). “Valuation has been pushed down unnecessarily low.”