Vaisala - Strong Q2 makes up for the slow start

Second quarter results came in stronger than expected

Vaisala showed a very strong performance in Q2/24 as its net sales increased by 13% to EUR 148.4m, topping our estimate of EUR 134.4m by a wide margin. EBIT amounted to EUR 23.7m (15.4/15.4m Evli/cons.), reflecting a margin of 15.9% (Q2/23 9.1%). The strong margin was driven by improved gross margin and continued successful cost consciousness. The Industrial Measurement’s (IM) gross margin was significantly stronger than we expected driven by stronger than expected volume development and improved sales mix. The W&E performance was slightly boosted by project sales recurring in the second quarter while project sales were on the lower side during Q1. 

Our updated estimates sit above narrowed guidance middle

With the strong performance in Q2, Vaisala narrowed its guidance for 2024E. Vaisala estimates that its full-year 2024 net sales will be in the range of EUR 540–570 million and EBIT in the range of EUR 68–78 million (prev. net sales EUR 530-570m and EBIT EUR 63-78m). After adjusting our estimates, we model net sales of EUR 562m and EBIT of EUR 76m for 2024E, our estimates being above the middle point of the narrowed guidance. For IM, we continue to estimate growth in H2 driven mainly by soft comparison period H2/23. We have also increased our estimates for IM service sales going forward. For W&E, we estimate continued growth, yet at a slower rate than in Q2, due to project sales timing. Margin-wise, we model a relatively flat gross margin y/y while we expect that the company will continue to scale its OPEX to match the unpredictable market during the second half. 

HOLD with a TP of EUR 46 (EUR 42)

Vaisala is priced at 19-17x adj. EV/EBIT and 25-22x adj. P/E on our updated estimates for 2024-2025E. The company trades close to par compared to our peer group. Our updated DCF yields a fair value of EUR 46. We increase our TP to EUR 46 (prev. EUR 42) while keeping the rating at HOLD.