Administer - Persistent market conditions limit growth
Administer announced yesterday that it will lower its revenue guidance to EUR 74-76m, while narrowing its EBITDA-margin range upwards to 7-9%. We have made slight changes in our estimates but retain our target price of EUR 3.0 and BUY-rating.
Lowered revenue and refined profitability guidance
Administer lowered its revenue guidance for 2024 on Tuesday to EUR 74-76m (prev. EUR 76-81m), representing a 0-2% decrease compared to 2023 revenue. The primary reason for the revised guidance appears to be the generally poor economic conditions in Finland, which have already negatively impacted the company during the first half of the year, particularly in personnel leasing. Given that revenue declined by 2.2% in H1, the updated guidance is not a major surprise. The company also refined its EBITDA-margin guidance to 7-9% (prev. 6-9%), as the cost savings program has progressed according to plan, evidenced by a significant improvement in profitability, exceeding the guidance range in H1.
Slightly revised estimates for the near term
In line with the updated guidance, we have made minor changes in our estimates for the near term. We had previously projected slight revenue growth for 2024 at the lower end of the prior guidance range (EUR 76.2m). However, due to the lowered guidance and a slower-than-expected recovery in the personnel leasing business, we have revised our revenue estimate for 2024 to EUR 75.2m. The lower revenue guidance also applies slight downward pressure on our profitability estimates. Consequently, we have slightly adjusted our EBITDA-margin estimate to 8.1%, down from the prior 8.5%.
BUY with a target price of EUR 3.0
We have made slight downward adjustments to our revenue and profitability estimates but are keeping our target price of EUR 3.0 and our BUY-rating. While the lowered revenue guidance is not ideal, we remain cautiously optimistic due to the expected continuation of the profitability turnaround.