Bouvet (AO) | Buy | Utilisation pressure offsets headcount growth

Research evidence excerpt

Bouvet (AO) | Buy | Utilisation pressure offsets headcount growth

Bouvet Buy | Target Price: NOK60.00

Company description Management

Bouvet is a Norwegian IT consultancy that provides IT solutions and digital Per Gunnar Tronsli, CEO

communication services. Its clients include large enterprises and organisations Trude Hole, CFO

and its revenue is equally split between the public and private sectors. The Key shareholders

company has over 2,000 employees. Bouvet is headquartered in Norway and Free float 86.86%

listed on the Oslo Stock Exchange. Folketrygdfondet 7.34%

Erik Stubø and Sverre Hurum 5.76%

Investment case Valuation methodology

Stabilising hiring trends and early signs of improving project We value Bouvet using a DCF with a long-term EBIT margin of

pipelines support a gradual recovery in utilisation and billable 12.3%, and discount using a WACC of 8.5%.

capacity over the next 12–24 months. We expect the company to maintain a high payout ratio

Exposure to infrastructure, energy, public-sector and defence- supported by stable free cash flow and a solid balance sheet.

related projects provides a resilient demand base, supporting Headcount growth is expected to recover gradually from current

stable revenues even in a softer consulting market. levels, supporting revenue growth as demand conditions

Following the recent share price decline, valuation has become improve

more attractive, while Bouvet continues to demonstrate strong Risks to our rating

margins, cash generation and a high payout ratio. A slower-than-expected recovery in demand or utilisation,

Catalysts delaying margin normalisation.

Recovery in hiring and utilisation as demand conditions Wage inflation exceeding hourly rate increases, putting pressure

improve. on margins.