Research note


Doro: Q2’18 preview: No growth yet?

For Doro’s Q2 report, on Friday July 13, we expect sales to decrease by -1 percent y/y to SEK 440m, whereof SEK 62m from Services (Care).

As we have mentioned before we believe that the customers’ excess inventory and the new phones in North America will hamper Q2 sales but for H2’18 we expect Doro to come back to a modest growth.

As for earnings we estimate an EBIT of SEK 21m, SEK 4m lower than Q1’18, which is related to an expected gross margin decline of 1 percentage point from Q1’18 to 33-34 percent. This would altogether imply an EBIT margin of 5 percent.

We are looking forward to hear more about the acquisition of Welbeing and the Care strategy. In short, the large UK telecare market is fragmented and about to enter a digital transition, which is a great fit for Doro and its first mover position. In addition, the UK market is, as we wrote in our last update in June, an interesting opportunity for Doro in terms of rolling out its new Care services.

Our base case amounts to SEK 56 while the shares are still trading close to our bear case of SEK 38. As a return to growth is necessary for a closing of the price/value gap we expect no substantial changes in the value or the sentiment from this earnings report.

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