B3 Consulting Group: Organic growth comps easy in '25e - ABG

- Minor estimate revisions
- Decline in utilisation appears to have stopped
- '25e EV/EBITA of 8x

H2 increasingly likely to mark a trough
Although Q3 was tough for B3, the company performed slightly above expectations. Sales declined organically by ~7%, which was slightly better than expected. Compared to FactSet consensus, B3's sales were 4% above expectations while adj. EBITA was SEK 1m better (+11% in relative terms). The utilisation rate appears to have stabilised, but again this was mostly due to a reduction in FTEs with a utilisation rate of zero. For meaningful earnings growth to occur, general demand conditions need to improve in the IT consulting market. That said, B3 appears to be performing well enough to achieve organic earnings growth starting next year, mostly thanks to the lower cost base following its cost-reduction programme.

'25-'26e adj. EBITA up 1%
We make minor changes to '24-'26e and raise '25-'26e EBITA by 1% after the report, which did not deviate meaningfully from our estimates in absolute numbers. Utilisation appears to have stabilised, but with both the closing of the B3 Poland and Webstep acquisitions as well as the reduction in unstaffed Fates, we expect to see a representative run-rate utilisation in Q4. Our positive view of the company remains unchanged because we assess that the current problems are sector-wide rather than company-specific.

Valuation
Based on our revised estimates, the company is trading at 8x '25e EV/EBITA, which is ~20% below current peer multiples and ~25% below the historical average for Nordic IT services peers. We reiterate our fair value range of SEK 130-200.

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