Tietoevry raises profit margin target despite weak revenue outlook

LootboxPhobia · 2026-02-14T03:38:25+00:00

Tietoevry raises the 2026 cost savings target to €130 million, with organic growth expected to be flat or slightly negative. Despite a 2% decline in organic revenue, EBITA profit margin increased to 16.2%. Employee numbers decreased by about 10%, and traditional business faced obstacles. The target price is raised to €18, maintaining a "Hold" rating.

LootboxPhobia

2026-02-14 03:38:25

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Investing.com – Tietoevry has raised its cost savings target for 2026 to €130 million, while expecting organic growth to remain flat or slightly negative, indicating that this Nordic IT service provider is more focused on improving profit margins rather than expanding top-line revenue.

The company reported a 2% decline in organic revenue in Q4 2025, with the Tech Consulting division remaining weak, and traditional Banktech and Caretech businesses continuing to decline. Despite the soft revenue, adjusted EBITA margin surged to 16.2%, up 3.8 percentage points year-over-year, highlighting significant progress in structural cost restructuring.

Tietoevry has reduced its employee count by approximately 10% year-over-year, cutting about 1,600 full-time employees, and shifted the Tech Consulting division toward a simplified operating model with clear responsibility divisions.

For 2026, the company expects organic growth between -2% and 0%, acknowledging that declining traditional businesses and base effects will create about a 3 percentage point structural headwind. However, management expects adjusted EBITA margins to reach 14.8-15.8%, up from 13.8% in 2025, driven by additional cost savings and the easing of IFRS 5 burdens.

Kepler Cheuvreux has raised Tietoevry’s target price from €16 to €18 while maintaining a “Hold” rating. The firm notes that although progress has been made in margin restructuring, revenue recovery remains lacking, and catalysts are limited.

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