Talenom (Extensive Report): Growth leap to the next level

After an acquisition-driven growth leap, the company has moved to a new size class and become a significant player in Sweden as well. Profitability has been hurting due to growth investments, but we expect the situation to improve in the coming years and earnings growth rate to return to over 20% annually. The technological competitive advantage of the core business has strengthened with the scale growing and new growth drivers may emerge from new ventures in the next few years. The valuation has fallen to a reasonable level (2023e P/E 29x and EV/EBIT 24x), but in the short term the increase in interest rates may still weigh on the share. However, for a long-term investor, we consider the risk/return ratio of the share to be attractive now.