Solwers' Q3 results remained weak, with profitability still at an unsatisfactory level and organic growth significantly negative. Q3 revenue came in 8% below our estimate and was down 7% y/y, while adjusted EBITA was EUR -0.1m versus EUR 0.4m a year ago. Revenue declined due to fewer new assignments than the company expected, and in Sweden lower billing rates and capacity adjustments reduced revenue. The company has agreed with its principal bank on a temporary easing of the debt covenant, as Solwers estimates that the net debt/EBITDA covenant may not be met at year-end, and it is in discussions to resolve the situation. We expect EBITA to decline from EUR 1.1m in 2025 to EUR 0.6m in 2026, in line with company guidance. Following the Q3 report, we cut our top-line estimates by 3-5% for 2026-28, and we cut adjusted EBITA by 30-48% for 2027E-28E. We derive a clearly lower DCF- and peer-based fair value range of EUR 1.2-1.4 (1.7-2.0).
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