Integrated Cloud And Digital Health Solutions Will Create Enduring Opportunity

Key Takeaways

• Transition to integrated, cloud-based platforms is driving increased customer retention and a greater share of high-margin, recurring software revenue.
  
• Healthcare digitalization and demographic trends are fueling sustained demand, while operational improvements are supporting further margin and earnings growth.
  
• Persistent macroeconomic, currency, migration, and regulatory challenges threaten revenue, margins, and competitive positioning amid intensifying industry rivalry and evolving client requirements.

Catalysts

Provides healthcare ICT and mobile workflow solutions worldwide.

• The shift to cloud-enabled, integrated platform solutions is expected to increase customer stickiness and expand Ascom's ability to cross-sell services, directly supporting recurring revenue growth and improving gross margins as more solutions move to higher-margin software-based offerings.
  
• The combination of an aging global population and the accelerating digitalization of healthcare workflows continues to drive long-term demand for real-time communication and workflow optimization, underpinning mid
• to long-term revenue growth despite current market volatility.
  
• A visible improvement in operational efficiency, cost discipline, and a streamlined organizational structure is enhancing EBITDA progression and should continue to support margin expansion and earnings growth as short-term restructuring costs subside.
  
• Recent customer wins, strategic partnerships, and the expansion of platform rollouts across regions indicate growing market penetration, which is likely to positively impact future order intake and top-line revenue as delayed investments and project backlogs normalize.
  
• Successful migration of existing customers to next-generation platforms-and the addition of advanced features such as pre-emptive alarming and smart alarm filtering-position Ascom to capture a larger share of digital transformation investment, supporting both revenue acceleration and a shift to higher-margin, recurring software revenues.

Ascom Holding Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Ascom Holding's revenue will grow by 3.0% annually over the next 3 years.
• Analysts assume that profit margins will increase from 1.1% today to 5.4% in 3 years time.
• Analysts expect earnings to reach CHF 16.8 million (and earnings per share of CHF 0.38) by about September 2028, up from CHF 3.0 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 13.7x on those 2028 earnings, down from 51.5x today. This future PE is lower than the current PE for the GB Healthcare Services industry at 51.5x.
• Analysts expect the number of shares outstanding to grow by 2.08% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 4.76%, as per the Simply Wall St company report.

Ascom Holding Future Earnings Per Share Growth

Risks

• Prolonged market volatility and macroeconomic uncertainties, especially in the U.S. & Canada, have led to investment delays and a decline in order intake, potentially dampening revenue growth over the long term if such trends persist.
  
• Continued adverse currency fluctuations, with key currencies like the U.S. dollar, euro, and Nordic currencies weakening against the Swiss franc, have already reduced net revenue and could continue to negatively impact reported financials and earnings.
  
• Despite efforts to transition to cloud-enabled, integrated platforms, Ascom faces risk from delays and incremental migration for both existing and new customers, which could slow revenue acceleration and burden margins if upgrade incentives or migration costs outstrip realized efficiencies in the early stages.
  
• The company remains exposed to competition from larger players and innovative startups in digital health, particularly as the industry trend favors fully integrated, single-vendor solutions, potentially leading to pricing pressure, margin compression, and loss of market share.
  
• Ongoing regulatory, trade, and tariff uncertainties (such as U.S.–China tariffs and evolving healthcare standards) create increased risk of compliance costs, supply chain disruption, and margin erosion, which may offset cost-cutting gains and undermine long-term earnings stability.

Valuation

• The analysts have a consensus price target of CHF5.275 for Ascom Holding based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of CHF6.8, and the most bearish reporting a price target of just CHF3.75.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be CHF311.4 million, earnings will come to CHF16.8 million, and it would be trading on a PE ratio of 13.7x, assuming you use a discount rate of 4.8%.
• Given the current share price of CHF4.3, the analyst price target of CHF5.28 is 18.5% 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.