Vaisala - Solid performance despite uncertainty

 Strong Q4 highlights the company's operating leverage

Vaisala’s Q4 figures were in line with the preliminary figures given out in January as net sales came in at EUR 167.5m and EBIT was at EUR 28.0m. Profitability improved significantly year-on-year, driven by strong net sales growth and effective cost management. Both IM and W&E grew profitably as IM grew 12% y/y W&E grew 15% y/y while IM EBITA % improved to 21.6% (Q4/23: 15.8%) and W&E to 15.8% (10.0%). The fourth quarter is a good example of the company’s operating leverage as its profitability scales well with increased volumes. Alongside robust financial performance, Vaisala's orders remained at a very high level. Orders received decreased by just 2% to EUR 144.5m (Q4/23 EUR 147.1m), even though the comparison period included a EUR 20m order in Kuwait.

Should continue to grow profitably in 2025E

Vaisala estimates that its FY 2025 net sales will be in the range of EUR 590-620m and its EBITA will be in the range of EUR 90-105m. We have revised our estimates slightly downwards based on the new guidance. We now model net sales of EUR 615.1m (prev. EUR 638.2m) and EBITA of EUR 99.5m (prev. EUR 105.3m). We continue to see many tailwinds for the company for 2025E as the backlog remains strong, demand in some of the Industrial Measurements markets is starting to pick-up and W&E should continue to grow partly aided by the acquisitions. While there are many positives, there are also some potential headwinds for 2025E, mainly coming from external sources. The company’s Finnish operations will be affected by strikes in Q1/25. While negative, we do not model such effect on figures as we saw in Q1/24. Alongside strikes, tariffs on European imports in the United States could further negatively impact both of the company’s business areas, resulting in loss of net sales and/or margin pressure. While we have not currently factored any significant impact from potential tariffs into our models, we recognize it as a potential downside risk. 

Long-term potential beats the short-term uncertainty

Our valuation of Vaisala is based on the company’s peer group, historical valuation levels, and the fair value determined through our DCF model. Vaisala is priced at adj. EV/EBIT of 20-17x based on our estimates for 2025-2026E. Following minor estimate cuts, we adjust our TP to EUR 55.0 (prev. EUR 56.0) while we maintain our rating at ACCUMULATE.