Net sales were 3% below RRe. Based on our estimates, the deviation is mainly driven by a weak USDSEK, which decreased by 3% on average Q/Q. Despite the weaker exchange rate, AVTECH’s cost control continues to impress, with EBITDA only 1% below our expectations, although EBITDA was down Q/Q and Y/Y. The main reason for declining EBITDA is the recent organisational investments telegraphed earlier in the year.

Our 2025e estimate forecasts SEK 7.5m in incremental sales from the Q3 2024 run-rate of SEK34.4m. This is higher than the SEK3.7m achieved YTD and in line with that achieved in 2023 (only including the price increase of the extended Southwest agreement). We find our estimates reasonable with investments in its salesforce and ongoing trials that may spill over to 2025.

The stock saw a sharp sell-off from the preannouncement (down -13% since 06/10/24). Hence, Q3’24 annualised AVTECH trades at an EV/EBIT of 20.7x and, based on our 2025e, EV/EBIT of 13.1x, compared to the median 3-year NTM EV/EBIT valuation of 17.0x. Thus, we believe the market expects SEK1m-2m in EBIT growth for 2025e, well below the post-pandemic growth rate. We reiterate our fair value range (SEK3.7-12.1, Base Case SEK6.2 – implied 41% upside to Base Case) and believe AVTECH has a favourable asymmetrical risk profile with each new contract adding to the upside while contract maturities limit the downside.