Demand Shifts Will Expand Elderly Care Capacity In Scandinavia

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AnalystConsensusTarget
Consensus Narrative from 3 Analysts
Published
10 Feb 25
Updated
24 Jul 25
AnalystConsensusTarget's Fair Value
SEK 75.00
14.3% undervalued intrinsic discount
24 Jul
SEK 64.30
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Author's Valuation

SEK 75.0

14.3% undervalued intrinsic discount

AnalystConsensusTarget Fair Value

Last Update01 May 25
Fair value Increased 8.70%

Key Takeaways

  • Accelerated capacity expansion, regulatory tailwinds, and strong brand positioning are driving sustained revenue growth, market share gains, and higher contract win rates.
  • Ongoing efficiency initiatives and increased financial flexibility are supporting margin improvements, strategic investments, and stable long-term earnings.
  • Contract exits and regulatory shifts are driving revenue pressure, margin volatility, and uncertainty about long-term growth and profitability, despite some operational improvements.

Catalysts

About Attendo
    Provides health and care services in Scandinavia and Finland.
What are the underlying business or industry changes driving this perspective?
  • Accelerating capacity expansion through new care home openings and targeted acquisitions is positioning Attendo to benefit from increasing elderly care demand driven by demographic shifts in Scandinavia and Finland, supporting sustained revenue and occupancy growth.
  • Positive regulatory changes in Finland-such as the relaxation of mandatory municipal capacity usage after a 3-year transition and ongoing demand queue build-up-are likely to boost market share for private providers like Attendo, enhancing long-term revenue visibility and growth.
  • Operational efficiency initiatives, including better staffing systems, digitalization projects, and AI pilots, are already driving significant margin improvements, and continued efficiency gains are expected to further boost net margins and earnings.
  • Improved customer satisfaction, with cNPS at an all-time high, coupled with strong brand positioning and expertise, strengthens Attendo's competitive advantage in public tenders, likely contributing to higher contract win rates and stable revenue streams.
  • Increased financial flexibility-backed by strong free cash flow, active capital allocation (dividends and share buybacks), and an expanded revolving credit facility-enables Attendo to reinvest in bolt-on acquisitions and strategic growth projects, supporting both top-line and bottom-line improvement.

Attendo Earnings and Revenue Growth

Attendo Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?
  • Analysts are assuming Attendo's revenue will grow by 2.3% annually over the next 3 years.
  • Analysts assume that profit margins will increase from 2.9% today to 4.3% in 3 years time.
  • Analysts expect earnings to reach SEK 882.3 million (and earnings per share of SEK 5.77) by about July 2028, up from SEK 564.0 million today.
  • In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 13.1x on those 2028 earnings, down from 17.1x today. This future PE is lower than the current PE for the GB Healthcare industry at 16.1x.
  • Analysts expect the number of shares outstanding to decline by 4.87% per year for the next 3 years.
  • To value all of this in today's terms, we will use a discount rate of 6.29%, as per the Simply Wall St company report.

Attendo Future Earnings Per Share Growth

Attendo Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?
  • Ongoing termination of home care and outsourcing contracts due to unsustainable terms in Scandinavia is resulting in immediate non-recurring costs, reduced volumes, and flat or declining reported sales growth, particularly impacting revenue and net margins as this business line is rationalized.
  • Top-line sales have been negatively affected by currency headwinds (weaker euro), ended contracts, and lower pricing in segments such as Finnish Elderly Care due to regulatory changes (lower staffing requirements), highlighting exposure to both FX risk and governmental policy shifts, which can further depress revenue and earnings.
  • Home care segment faces operational challenges and profitability issues, evidenced by contract exits, ramp-down inefficiencies (staff costs without matching revenue), and a need for ongoing structural changes, all leading to margin pressure and volatility in short
  • to mid-term earnings.
  • Future growth in Finland, while underpinned by demographic demand, depends in part on municipal regions' willingness and financial ability to shift more elderly care to private providers; if political momentum stalls or public skepticism grows against privatized care, revenue growth potential could be curtailed long term.
  • Despite current operational improvements and cost savings from lower staffing requirements in Finland, sustained labor shortages, wage inflation, or future tightening of regulatory/quality mandates (such as increasing minimum staffing levels) may reverse margin gains and heighten cost pressures, directly impacting net margins and long-term earnings stability.

Valuation

How have all the factors above been brought together to estimate a fair value?
  • The analysts have a consensus price target of SEK75.0 for Attendo based on their expectations of its future earnings growth, profit margins and other risk factors.
  • In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be SEK20.5 billion, earnings will come to SEK882.3 million, and it would be trading on a PE ratio of 13.1x, assuming you use a discount rate of 6.3%.
  • Given the current share price of SEK64.4, the analyst price target of SEK75.0 is 14.1% higher.
  • We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

How well do narratives help inform your perspective?

Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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