Plaza SaaS And Avenue Launch Will Expand Global Presence

Key Takeaways

• Expansion of Pricer's SaaS and innovative offerings aims to boost recurring revenue, sales, and market share, improving long-term profitability.
  
• Strategic restructuring, market focus, and cost-effective production enhance net margins and competitiveness amid global economic uncertainties.
  
• Declining sales and market uncertainties, coupled with currency and restructuring challenges, may hinder Pricer's revenue growth and profitability.

Catalysts

Provides in-store digital solutions in Europe, the Middle East and Africa, the Americas, and Asia and Pacific.

• Pricer's SaaS service, Plaza, which is currently used in over 5,000 stores, is targeted for significant expansion. This increased adoption of their SaaS offering has the potential to generate consistent, high-margin recurring revenue streams.
  
• The launch of Pricer Avenue, a new innovation shortlisted for multiple awards, and planned pilots in the second half of the year could open new customer acquisition opportunities, potentially driving increased sales and revenue growth in 2026.
  
• Pricer's strategic restructuring and focus on efficiency in markets like France, coupled with deploying their own sales force in the Nordic and Baltic markets, is expected to improve net margins and profitability. The full impact of these efficiencies is anticipated by 2026.
  
• Investments in expanding market presence in high-potential regions such as North America and the UK, particularly through increased sales resources, are aimed at capturing market share and driving revenue growth in these underinvested, high-opportunity markets in the medium to long term.
  
• Pricer's second fully automated production line, being established in Thailand, is designed to significantly reduce production costs, which can improve gross margins across their product lines, especially as they navigate global economic uncertainties.

Pricer Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Pricer's revenue will grow by 13.7% annually over the next 3 years.
• Analysts assume that profit margins will increase from 4.6% today to 7.0% in 3 years time.
• Analysts expect earnings to reach SEK 247.0 million (and earnings per share of SEK 1.28) by about May 2028, up from SEK 110.9 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 8.5x on those 2028 earnings, down from 8.7x today. This future PE is lower than the current PE for the GB Electronic industry at 26.0x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.75%, as per the Simply Wall St company report.

Pricer Future Earnings Per Share Growth

Risks

• Pricer's declining net sales and order intake in Q1 could indicate challenges in meeting internal expectations and external market demands, potentially impacting future revenue projections.
  
• Ongoing market uncertainties and cautious investment behavior by customers, as indicated by the timing of investments, suggest potential delays in revenue realization and overall business growth.
  
• The impact of currency fluctuations, particularly the weakened U.S. dollar, has led to significant FX expenses, which may affect net margins and overall profitability.
  
• Restructuring efforts in France due to lower sales expectations may lead to short-term operational disruptions and costs, affecting net earnings and profitability.
  
• Tariffs on products manufactured outside of China and potential further tariffs could negatively impact the return on investment (ROI) for U.S. operations, impacting future revenue streams.

Valuation

• The analysts have a consensus price target of SEK10.5 for Pricer 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 SEK3.6 billion, earnings will come to SEK247.0 million, and it would be trading on a PE ratio of 8.5x, assuming you use a discount rate of 6.7%.
  
• Given the current share price of SEK5.88, the analyst price target of SEK10.5 is 44.0% 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.