Analyst’s Comment
Teleste’s expansion into North America progresses with new contract manufacturing partnerships
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Teleste has agreed with Rebl Group’s subsidiary PunaMusta Oy to supply thousands of digital displays for Helsinki Region Transport (HSL) vehicles. During the contract period starting in 2025, Teleste’s display technologies will be used to renew the visibility of digital advertising content in HSL’s buses, trains, trams, and metro trains. The entire system forms a significant public transport media, as approximately one million journeys are made daily on HSL’s transport.
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It now seems that Teleste is finally starting to rise. The order book is strong, and the US market will hopefully really take off (if tariffs don’t water it down). Both business areas appear to be in good shape, and debt levels are very manageable. This is a 7 euro stock within 12 months, and if someone makes a takeover bid for it, the price could be closer to 10 euros. However, at this 4 euro price, the EV is still quite low. Publicly, I haven’t made any other predictions except for Terveystalo a couple of years ago, and back then the price forecast hit the nail on the head.
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So isn’t it already factored into Teleste’s stock price that things will start to improve in the USA too?
The stock has already risen 53% YTD, even though the order book has only slightly improved…
At this point, one might consider whether the share price level of the last year is truly relevant when assessing the company’s real value?
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I agree that Teleste still has potential from current levels, provided things progress well in North America. However, I would like to hear more about what kind of scenario you base your “7 euro stock within 12 months” view on?
In relation to our current forecasts, that 7 euro share price level would mean that Teleste would be priced at approximately 21x P/E ratio and 16x EV/EBIT ratio in September 2026. The corresponding figures for 2027 would be 19x and 15x. These would seem quite high multiples. Of course, our 2027 growth forecast (3%) and profitability (EBIT 6.0%) are still clearly below Teleste’s targets looking to 2030 (average 10% growth and EBIT 7-12%). If the company were to progress at the pace of its targets in the coming years, there would still be clear upward pressure in our forecasts. I assume that in your view, the company will get close to the target level and the longer-term growth outlook also looks strong?
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If the company operates efficiently in the US market (as it now seems), the scalability potential is completely different than if the company operated only in the Nordics, for example. In my opinion, the multiples prepared by Inderes in the previous message are not high, considering that it is a technology company with its own products, IP rights, and patents. However, those represent the average PE ratios of technology companies operating in the US market – not at all overly high forecasts. If the order book grows by over 20%, I also assume revenue will grow faster than Inderes’ 10% growth, of course, assuming it’s not just a one-quarter wonder. At least based on the CEO’s positive, but admittedly cautious, comments, I dare to predict that the company’s sales pipeline has clearly strengthened, and through that, I expect the order intake to continue to develop in the future. Yes, I will continue to buy more on suitable dips. However, I have also been wrong sometimes 
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That reminded me of a phrase launched by Paavo Väyrynen?: “I once thought I was wrong, but I was mistaken.” It’s cheap, but Finnish companies rarely succeed in the US, so investors are still waiting for factual figures before they believe.
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Here are Ate’s preliminary comments as Teleste reports its results next Wednesday. 
The company’s received orders have been in strong growth for three quarters already, which also started to show in revenue in Q2. We expect the trend to have continued similarly and forecast a 17% growth in Teleste’s revenue, driven particularly by increasing volumes in Broadband Networks in North America. With the company’s cost structure streamlined in recent years, the growth should also be reflected in the bottom line. In the report, we will again follow the company’s comments regarding its North American expansion, tariffs, and market outlook. The company’s current year guidance currently appears cautious, and we still consider a guidance raise later in the year likely.
Tomorrow it is Teleste’s turn to report its Q3 results. Numbers from US peer CommScope were already received last week. Tremendous growth figures from the ANS segment, which operates in the same markets as Teleste, compared to the comparison period.
According to CommScope, the now-started DOCSIS 4.0 investment cycle is still very much at its beginning, and according to Dell’Oro’s estimates, the peak would only be seen in 2028. In light of this, Teleste also has good growth potential in the coming years, and it will be interesting to hear the company’s outlook comments again tomorrow.
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July–September 2025 in brief
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Revenue: 34.5 M€ (29.9 M€), growth +15.2 %
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Adjusted EBITDA: 3.5 M€ (2.5 M€), growth +38.1 %
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Adjusted operating profit: 2.3 M€ (1.3 M€), growth +72.9 %
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Operating profit: 2.2 M€ (1.1 M€), growth +91.7 %
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Earnings per share: 0.07 € (0.04 €), growth +100.3 %
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Cash flow from operations: 4.6 M€ (3.4 M€), growth +35.8 %
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Orders received: 31.6 M€ (31.3 M€), growth +0.7 %
January–September 2025 in brief
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Revenue: 102.5 M€ (96.0 M€), growth +6.8 %
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Adjusted EBITDA: 9.6 M€ (7.2 M€), growth +34.0 %
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Adjusted operating profit: 5.9 M€ (3.3 M€), growth +77.9 %
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Operating profit: 5.6 M€ (0.3 M€), improvement +5.3 M€
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Earnings per share: 0.13 € (-0.05 €), improvement +0.18 €
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Cash flow from operations: 11.1 M€ (10.6 M€), growth +4.5 %
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Orders received: 108.1 M€ (88.6 M€), growth +22.0 %
Outlook for 2025 (specified)
Teleste estimates its 2025 revenue to be 135–150 M€ and adjusted operating profit to be 4–7 M€, with the result expected to be at the upper end of the range.
US import duties continue to cause uncertainty and may weaken profitability in the short term.
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Here are Ate’s and Roni’s quick comments on the Q3 results.
Teleste’s Q3 performance was largely in line with our expectations, and the result showed a clear improvement from the comparison period. The company expects the result to fall within the upper end of its guidance range, and we still consider a guidance raise later in the year possible. A minor concern in the report was the largely stable received orders, although this appears to be partly explained by timing factors after a very strong start to the year.
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Atte interviewed Teleste’s CEO Esa Harju after Q3.
Topics:
00:00 Introduction
00:13 Q3 highlights
01:01 Broadband Networks development
02:20 Impact of tariffs has been limited
02:58 Expanding production to Mexico
04:44 Situation in the European market
05:56 Public Safety and Mobility development
07:55 Background thoughts on guidance
09:26 Thoughts on next year
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Teleste’s Q3 earnings improvement was largely in line with our expectations, and North American expansion is progressing well. At the same time, the Public Safety and Mobility business has also been put in a good position, and the starting points for profitable growth remain good.
The excellent improvement seen in Teleste’s business is also reflected in the company’s share price, which has nearly doubled in a year and has risen by over 50% this year alone. As a result, the stock’s valuation has increased and appears neutral in our opinion in the short term. Thus, we are taking a small breather with the stock at this point, even though we still see clear opportunities for the company to grow its earnings towards the end of the decade. In the next year, uncertainty is heightened by the merger of Cox and Charter, regarding which the company also highlighted in the risk section that the merger may cause changes to Cox’s short-term investment plans. In the longer term, the merger creates growth opportunities for Teleste, as the company is currently Cox’s sole supplier of DOCSIS 4.0. equipment.
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The operating profit % forecasts for the coming years are quite weak, on par with Kesko. Even in the 90s, a 15% operating profit was already achieved. Hopefully, the management doesn’t grovel too much, like, “pay according to your conscience.”
Teleste’s long-term goal by 2030 is to achieve an adjusted operating profit margin of 7-12%. Compared to this target, our forecasts are still conservative, and as stated in the reports, with good strategy implementation, the company has the potential for significantly better performance than our current forecasts.
However, the network equipment business is always highly competitive, and large operators have a strong negotiating position. This inherently limits the profitability potential in the industry.
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This order is an easily memorable example of Teleste’s solutions in the Public Safety and Mobility business:
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@Atte_Riikola Atte_Riikola Do you think this railway station delivery is one of the project deliveries Harju referred to in your interview? Presumably, the delivery & revenue recognition of this project will go at least mostly into 2026?
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It is not related to that project. As far as I understand, the majority of Public Safety and Mobility’s order book is directed at train manufacturer customers (e.g., Alstom, Stadler, Caf, Siemens, and newly Hitachi).
The Q3 report also refers to project deliveries to train manufacturers.
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Atte is right. Our biggest PSM-side projects are typically with train manufacturers, and my reference to year-end timings is mainly related to them.
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