Classification of NuWays AG to Bittium Oyj

Company Name:	Bittium Oyj
ISIN:	FI0009007264
Reason for the research:	Update
Recommendation:	BUY
Target price:	EUR 46
Target price on sight of:	12 months
Last rating change:
Analyst:	Julius Neittamo

Q3 preview: record backlog to support growth

Bittium publishes its Q3 business review on Thursday, 29 October. Q3'26e sales are seen to increase 68% yoy to € 38.9m (eCons: € 34.4m), up 6% qoq from an already exceptional quarter (Q2'26: € 36.6m). Record backlog of c. € 102m and Indra-related deliveries are seen to support Q3 growth (eNuW). The latter should carry a high operating margin and support EBITDA to reach € 12.7m, at a 32.6% margin (eCons: € 10.2m / 29.7% margin). However, the Indra licensing deal accelerates amortisation and is thus seen to lift D&A to € 5.0m in Q3 (Q2'26: € 2.0m), staying elevated for the remainder of the year and thus offsetting the margin gain. This leaves our EBIT estimate at € 7.7m with 19.8% margin (eCons: € 6.6m / 19.2% margin).

Q3 commercial newsflow centred on three events. Sweden placed its first order for Tough SDR radios for c. € 0.7m under the Nordic framework agreement, while Denmark joined the same framework. Bittium is set to win further orders in Sweden and take market share from Elbit there, in our view. Furthermore, Bittium signed an important MoU with Safran Electronics & Defense to offer tactical communications to the French Armed Forces. The MoU does not yet constitute a firm commercial agreement, but we regard it as significant for the long-term. Bittium’s agreements with Indra Sistemas, BAE Systems and now Safran show that major European OEMs recognise its competitiveness in tactical software-defined radios and IP networks.

Bittium unveiled a new business structure effective FY27. Engineering Services merges into Defense & Security, leaving two reporting segments, Defense & Security and Medical. In parallel, change negotiations at Bittium Engineering Services Ltd concluded with the termination of 22 of 120 employees, generating annual cost savings of c. € 2m from January 2027. Bittium expects restructuring costs of c. € 0.5m in H2'26.

Visibility remains excellent. The record order backlog of c. € 102m, 92% of which lies in Defense & Security, covers much of the next twelve months and underpins management’s confidence in H2'26. Bittium announced no major orders in Q3, but this does not imply weak order intake, as not every order triggers a release and defence customers often limit disclosure.

We make minor adjustments to our model. We revise down Engineering Services sales estimates for H2'26e and beyond. While the merger of the consulting business into Defense & Security only takes effect from FY27, the headcount reduction is seen to weigh on sales already in Q4'26. We also factor in the c. € 2m run-rate savings. For H2'26, EBITDA estimates move up on higher-margin Indra-related revenue, though higher D&A charges should offset the incremental profitability gain at EBIT level. Our FY26e sales of € 156m remain above guidance (€ 140-155m) and eCons (€ 153m), while our EBIT estimate of € 29.2m sits within guidance (€ 26-32m) and slightly below eCons (€ 30.3m).

Bittium enters year-end in a strong position: a record backlog, a margin-accretive Indra deal and growing OEM validation underpin the investment case. We reiterate BUY with a € 46 PT based on DCF.

You can download the research here: bittium-oyj-2026-10-20-update-en-11125
For additional information visit our website: https://www.nuways-ag.com/research

Contact for questions:
NuWays AG - Equity Research
Web: www.nuways-ag.com
Email: research@nuways-ag.com
LinkedIn: https://www.linkedin.com/company/nuwaysag
Adresse: Mittelweg 16-17, 20148 Hamburg, Germany
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