Headwinds test investor patience

研报英文原文证据摘录

Headwinds test investor patience

Dynavox Group

Why we like Dynavox

• We estimate that there will be visibility on ~20% of the revenue base in a couple of

years, underpinned by LinkedIn hiring data. While recurring revenues and customers

are essential for business success, we argue that the timing of recurring revenue

streams is less important.

• Importantly, the more Dynavox grows, the greater the visibility becomes, as

replacement sales increase. This is mostly due to Dynavox's successful 'touch

products', which users are more likely to replace in a predictable manner after ~5 years

of use. Replacement sales also imply a higher margin over time because they do not

carry such a high sales commission as first-time sales.

• While Dynavox's sales do not technically recur, its end-users tend to come back. We

believe that recurring cash flow should be valued similarly to contracted cash flows

if the propensity to replace or renew a product is high. Moreover, the timing of the

replacement is less important than whether it is likely to happen. Therefore, we argue

that Dynavox should trade at a meaningful premium to peers.

Share of re-occurring* sales

Source: ABG Sundal Collier.

Footnote: (*) Replacement sales are deemed re-occurring.

Dynavox vs. peers

Dynavox is trading at a '26e EV/EBIT of 17x, while we expect EBIT to grow by 44% in

'27e. Our target price implies that Dynavox should trade at a 10% premium to the median

peer, trading at a '26e EV/EBIT of ~19x. Given the arguments above, and the difference in

Dynavox's nature of revenues versus peers, we do not find it unreasonable that Dynavox

trades at a minor premium.

'26e EV/EBIT - Dynavox vs. peers '27e EBIT growth - Dynavox vs. peers

Source: ABG Sundal Collier, FactSet. Source: ABG Sundal Collier, FactSet.