Many small investors are eagerly awaiting Nibe’s quarterly report, which is set to be released on Friday. The heat pump company has seen its stock price plummet by over 70% since its peak in 2021.

However, there may be a glimmer of hope on the horizon for the company, which is based in Markaryd in Småland.

Kepler Cheuvreux, in an analysis released on Wednesday morning, predicts a weak result but improved trends for Nibe.

“The headwinds in the short term continue with high interest rates and elevated distributor inventories, although both are on the decline. The high inventory levels have resulted in very weak deliveries over the past few quarters, but as these levels decrease, Nibe’s deliveries should better reflect the underlying market developments,” the analysis firm writes.

Plenty of value in Nibe’s stock

The analyst Johan Sjöberg notes, “The stock offers plenty of value.”

One conclusion drawn by Kepler Cheuvreux is that the recovery in the European heat pump market is likely to be U-shaped, with interest rates being crucial for demand to return. CEO Gerteric Lindquist mentioned in the Q2 report that longer interest rates incentivize customers to switch from gas boilers to heat pumps.

“The management expects margins to return to historical levels within all business areas and thus for the group (around 13%),” Kepler Cheuvreux further writes in the analysis.

The analysis firm also points out that Nibe is a bet on market recovery in 2025 and labels 2024 as a lost year for the company and the industry.

“The stock is trading at high multiples in the short term, but when growth returns, we see upside for the stock.”

Kepler Cheuvreux reiterates its Buy recommendation and lowers the target price to 58 SEK (60).

In conclusion, while Nibe may face short-term uncertainties, the company’s long-term growth prospects appear promising. With a strategic focus on market recovery and a commitment to returning to historical margins, Nibe seems poised to weather the storm and emerge stronger in the years to come.

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