• We cut '25e-'27e adj. EBITA by 13-1%
• Gross profit per consultant at normal levels in '26e
• '25e EV/EBITA of 7.5x

What to expect in Q1'25e

We expect sales of SEK 335m for Q1'25e, implying y-o-y growth of 19% (of which the organic decline is -5%), along with EBITA of ~SEK 17m, corresponding to an EBITA margin of 5.1%. YTD data for IT consultants showed demand improvement, coupled with expectations for worsened hourly prices and a continued negative net recruitment. It is likely that IT consulting businesses are waiting for improved margins prior to resuming a recruitment agenda in line with historical averages.

Awaiting better conditions

We cut '25e-'27e sales by 1% on soft IT consulting market data. We also cut '25e-'27e EBITA by 13-1%, as we assume lower margins related to hourly price pressure and negative organic net recruitment in '25e. As long as margins remain under pressure, B3 is unlikely to see its IT consulting businesses return to growth. While B3 consists of a set of decentralised IT consulting businesses with autonomy, we believe that the group will act similarly to the market on aggregate. However, B3 deviates from the typical behaviour regarding acquisitions, which we believe can turn out to be value-accretive when earnings normalise in the sub-sector.

Valuation

Based on our revised estimates, the company is trading at 7.5x '25e EV/EBITA, which is ~30% below current peer multiples. Moreover, B3 is trading ~30% below its historical EV/FTE multiple, which implies that it is expected to generate 30% lower earnings per consultant than historically. In our view, current earnings are depressed due to a cyclical downturn rather than a permanent impairment of B3's ability to generate earnings. We reiterate our fair value range of SEK 130-200, as we assess that the current margin profile does not represent a steady-state margin in the coming five years.