Last Update 26 Jun 26
Fair value Decreased 7.50%ELISA: AI Network Analytics Contract Will Support A More Constructive Earnings Outlook
Analysts have trimmed the implied fair value for Elisa Oyj by about €4.18, reflecting updated expectations for slightly stronger revenue growth, a higher profit margin outlook, and a lower future P/E, based on a mix of recent price target changes and rating shifts across the Street.
Analyst Commentary
Recent Street research on Elisa Oyj shows a split view, but bullish analysts highlight specific reasons why the stock could still appeal to investors who are comfortable with the current risk and return profile.
Bullish Takeaways
- Recent upward adjustments to Elisa Oyj price targets suggest that some bullish analysts see room for the stock to better reflect their updated views on revenue, margin potential, and the revised P/E profile.
- At least one upgrade on the stock signals growing confidence in execution, with bullish analysts indicating that current trading levels may not fully capture their expectations for the company’s operational performance.
- The mix of higher price targets and more positive ratings points to a view that, even after fair value trims, Elisa Oyj could still be priced at a level that these analysts consider reasonable for its earnings profile.
- Bullish commentary emphasizes that, despite contrasting views elsewhere on the Street, the company’s combination of revenue outlook, profitability, and valuation metrics remains attractive enough to justify a more constructive stance.
What’s in the News for Elisa Oyj
- MasOrange selected Polystar, part of Elisa Industriq, to provide a unified analytics and network probe solution across its newly combined mobile network, according to recent company news.
- The deployment uses Polystar’s AI Anomaly Detection module in Kalix to support faster, more accurate and proactive responses to service disruptions, with the aim of protecting customer experience, based on the same source.
- The MasOrange project applies a hybrid setup that combines on premises infrastructure with Google Cloud, providing scalable capacity and integration with existing systems, as outlined in the Polystar and Elisa Industriq update.
- Elisa Oyj issued earnings guidance for fiscal year 2026, indicating that full year revenue is estimated to be at the same level as or slightly higher than in 2025, according to a company guidance release.
Valuation Changes for Elisa Oyj
- Fair Value has been revised lower from €55.69 to €51.52, a trim of about €4.18 that reflects the updated model inputs.
- The Discount Rate has been adjusted slightly from 5.996201% to 5.972%, indicating only a marginal change in the assumed cost of capital.
- Revenue Growth has been reset from 2.32% to 3.58%, reflecting a higher forward revenue growth assumption for Elisa Oyj in the updated model.
- The Profit Margin has been updated from 18.80% to 19.55%, pointing to a modestly higher expected profitability level.
- The Future P/E has been reduced from 23.55x to 20.07x, indicating a lower valuation multiple being applied in the revised assessment.
Catalysts
About Elisa Oyj
Elisa Oyj is a Nordic telecommunications and digital services company with mobile, fixed broadband, corporate IT, cybersecurity and international software operations.
What are the underlying business or industry changes driving this perspective?
- Ongoing 5G upselling and wider take up of higher speed mobile plans, supported by security enriched bundles that already cover about 600,000 customers, can lift mobile service revenue mix and support earnings quality as more traffic moves to premium tiers.
- Expanding fiber construction and the early signs of stronger fiber related revenue, together with fixed broadband growth and data center connectivity opportunities into late 2026 and 2027, point to a larger recurring access base that can support revenue and EBITDA over time.
- The €40m annual cost savings program targeted for 2026, built on organizational simplification, automation, AI and procurement efficiencies, is designed to improve cost competitiveness and could support net margins and EBITDA even if headline revenue growth is modest.
- International Software Services is shifting toward a larger share of recurring revenue, which grew 13% in the quarter and 15% year to date, and this higher visibility revenue base can support more stable earnings and cash flow as the business moves beyond breakeven EBITDA.
- Growth in Corporate IT & Cyber, underpinned by wins such as the Kesko cybersecurity contract across several countries, together with demand for energy solutions like home batteries and grid scale flexibility software, can widen Elisa’s addressable market and support revenue and EBITDA diversification.
Assumptions
How have these above catalysts been quantified?
- This narrative explores a more optimistic perspective on Elisa Oyj compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
- The bullish analysts are assuming Elisa Oyj's revenue will grow by 3.6% annually over the next 3 years.
- The bullish analysts assume that profit margins will increase from 15.3% today to 19.6% in 3 years time.
- The bullish analysts expect earnings to reach €488.8 million (and earnings per share of €3.04) by about June 2029, up from €343.4 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as €388.0 million.
- In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 20.2x on those 2029 earnings, up from 17.4x today. This future PE is greater than the current PE for the GB Telecom industry at 17.4x.
- The bullish 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 5.97%, as per the Simply Wall St company report.
Risks
What could happen that would invalidate this narrative?
- Sustained intense price competition in Finnish mobile, particularly in low speed 4G tiers where Elisa is already seeing elevated churn and campaigns from the three main operators, could cap mobile service revenue growth and put pressure on earnings if Elisa needs to respond on price while still aiming to keep market share. This would weigh on revenue and net margins.
- If the transformation program and headcount reductions do not deliver the targeted €40m of annual cost savings in 2026, or if underlying cost inflation and commercial investments consume a large share of those savings, the intended improvement in cost competitiveness may fall short and limit progress on EBITDA and net margins.
- Project delays in International Software Services that are currently described as timing issues could persist or recur as tariff or macro related uncertainties continue. This would slow license and service revenue growth and delay the benefits from a higher mix of recurring software revenue, putting a cap on both revenue and EBITDA from this segment.
- The ongoing shift in fixed services away from traditional voice and toward fiber broadband, corporate networks and data center connectivity requires continued CapEx and successful customer wins. If fiber take up or corporate demand falls short of expectations, the fixed business may not provide the additional growth that management is targeting for late 2026 and 2027, limiting revenue growth and EBITDA support.
- The large scale organizational changes, process simplification and increased use of automation and AI across Consumer, Corporate, TechOps and Corporate Functions carry execution risk. Any disruption to service quality, slower decision making during the transition or weaker commercial focus could undermine Elisa's competitive position and offset the intended benefits, leading to softer revenue and pressured earnings.
Valuation
How have all the factors above been brought together to estimate a fair value?
- The assumed bullish price target for Elisa Oyj is €51.52, which represents up to two standard deviations above the consensus price target of €42.24. This valuation is based on what can be assumed as the expectations of Elisa Oyj's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
- However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €53.0, and the most bearish reporting a price target of just €33.4.
- In order for you to agree with the more bullish analyst cohort, you'd need to believe that by 2029, revenues will be €2.5 billion, earnings will come to €488.8 million, and it would be trading on a PE ratio of 20.2x, assuming you use a discount rate of 6.0%.
- Given the current share price of €37.12, the analyst price target of €51.52 is 27.9% 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.
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Disclaimer
AnalystHighTarget 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 AnalystHighTarget 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 AnalystHighTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
