For our part, maintaining the current price level with inflation adjustments is perfectly sufficient to achieve the targeted 15% profitability level, provided we sustainably reach the targeted billing rate level.
Customer prices are a very real concern, you are right about that. However, I don’t lose sleep over it myself; instead, I believe that the overcapacity in industry companies will be resolved both with the pick-up in demand and with the fairly significant change negotiations seen in the industry.
Gofore’s weak Q2 figures were already known after the profit warning. However, profitability should improve significantly in the latter half of the year, driven by already implemented change negotiations. Market comments for Finland were better than our expectations, but the situation in the DACH region remains difficult. We added the Huld acquisition to our forecasts and expect the company to continue performing better than the sector organically in the future. The share’s valuation picture is attractive (2026e EV/EBIT 9x). We lower our target price to 17.0 euros (previously 18.0), reflecting organic forecast changes, and reiterate our add recommendation.
Quoted from the report:
Due to Gofore’s strong performance, valuation multiples have historically been very high, EV/EBIT 13x–22x, and on average 17x over the last 5 years. However, in our view, growth company valuations were partly in a bubble in 2020–2021, supported by zero interest rates. With weaker operational performance and a decline in share price, the valuation has decreased. The 2026e EV/EBIT and P/E multiples are 9x and 12x. Absolutely, the valuation multiples are at least attractive in our view. However, the weak operational trend of the past year keeps us somewhat cautious.
I will add a few more sections from the report, as there has been discussion in the thread earlier about valuation and relative valuation.
Valuation Outlook is Attractive
Gofore’s years of strong performance have seen their first clear crack, as profitability-related risks have materialized. Generally, however, we still have confidence in the sector’s above-average performance going forward (measured by the 20-rule), in the medium term. In terms of valuation, we primarily look at 2026 multiples, as they account for the entire Huld acquisition. The 2026e EV/EBIT and P/E multiples are 9x and 12x. Absolutely, in our view, the valuation multiples are at least attractive. However, the weak operational trend of the past year keeps us somewhat cautious. We estimate the expected return to be approximately 15%, which is clearly above the required return on equity.
A quote from the report on relative valuation: “In our view, comparing the company to international digital age peers is partly justified due to Gofore’s strategic focus on international business. However, the share of international business is still relatively small and has recently decreased sharply (2023-24: 17% → 12% and Q2’25: 9%), which reduces the reasons to compare to these companies.” And indeed, as @TTTT mentioned there, the level of peers cannot be justified by the current operational performance. However, the same report also included a comparison to Finnish peers, where, in our view, it is still justified to price Gofore at a premium. Generally, however, peer analysis is currently somewhat challenging, as almost all companies in the sector are undergoing some scale of transformation or facing challenges, which makes the valuation of the peer group more difficult, especially for 2025e. Additionally, some have made larger acquisitions, which makes 2026e multiples a better point of comparison.
And if there’s one thing I’ve learned during my career, it’s that in public administration, at least, they try to hold onto skilled personnel until the very end, at the expense of investments. This is partly due to the intricacies of budget economics and partly because the Government refuses to reduce (legally mandated) tasks despite cuts. So one can assume that a large percentage of these additional cuts will directly hit IT investments. They are usually the largest expense item after salaries.
Gofore has become the worst-performing stock on the Helsinki Stock Exchange for the year and now holds the top spot among decliners, with its share price having fallen by 36.94% since the beginning of the year.
However, for some reason, the Kauppalehti list does not seem to include all shares on the Helsinki Stock Exchange. I looked at Nordnet’s list, and it shows that Spinnova (-54.82%), Duell (-43.82%), Bioretec (-43.45%), and Titanium (-39.76%) have performed even worse than GoFore.
Our acquisition of Huld has been completed today, a directed share issue was part of the payment - A stock exchange release and a press release on the matter have just been published.
AI and Gofore’s approach to it as a business or a tool is one of the most frequently asked topics by investors nowadays. If you paid attention in our strategy (CMD material, pp. 12-13) to the so-called Rethinking Consulting idea, i.e., the
Here are Joni’s comprehensive comments on Gofore’s performance in July and also August.
Gofore reported its July and August figures yesterday. The decline in revenue eased and decreased less than we expected. It was particularly positive that the efficiency parameter we calculated was better than expected and turned to growth for the first time in a long while. This supports profitability development and reduced the associated risk. The company reiterated the comments made in connection with the Q2 report regarding cautiously positive demand development in the private sector. However, the number of employees still decreased slightly. Overall, despite being quiet due to holidays, July and August were still slightly more positive than we expected.
Best wishes to all Gofore employees . Apparently no one was injured in the fire (?) - which is the most important thing. It’s a shame that the new great office probably suffered damage now
Thanks, Harri! Gofore Crew handled this well, pulling together and with only material damage. The office will likely be aired out and back in order soon. As we informed this morning, the impact on the specialists’ work was minimal.
Exciting news from our new Defence & Space business area! Huld is strongly involved in building the world’s first space-based gravitational wave observatory
Here are also Joni’s comments regarding that recent announcement. Gofore announced yesterday that Huld, which is now part of Gofore, had signed an agreement for a ten-year software project for the Laser Interferometer Space Antenna (LISA) project. The project involves building the world’s first space-based observatory for detecting gravitational waves. The contract is small in scale, but as a reference, it’s a very interesting project and reflects Huld’s good work in that sector.
Here are Joni’s comments as Gofore publishes its Q3 results next Thursday.
Gofore will publish its Q3 report next Thursday, according to our estimate, around 9:00 AM. We expect revenue to have grown in Q3, driven by an acquisition, and to have also turned to organic growth in September. Significant profitability improvement from the previous quarter is driven by the extensive change negotiations carried out in Q2. In Q3, we are particularly interested in market comments, as summer is usually the second turning point of the year, and in Q2, we received small, cautious signals of a better private sector market.
. Apparently no one was injured in the fire (?) - which is the most important thing. It’s a shame that the new great office probably suffered damage now 
