Kepler Cheuvreux on Monday moved Norwegian IT consultancy Bouvet (OL:BOUV) from a "hold" to a "buy" recommendation while leaving its target price unchanged at NOK60. The upgrade follows a quarter in which reported revenues fell short of analysts' expectations and the stock traded near its 52-week low.
Bouvet's shares were at NOK49.10, a level that is down 20.3% year-to-date and sits at the lower bound of the company's 52-week range. Kepler Cheuvreux noted the market reaction has been disproportionate to what it views as short-term operational headwinds.
Quarterly performance and drivers
The company reported fourth-quarter revenues of NOK998 million. That figure was reported as missing consensus expectations by 5% and was also described as 6% below analyst estimates in Kepler Cheuvreux's assessment. The shortfall was attributed chiefly to a weaker billing ratio, elevated holiday leave around the Christmas period, and continued cautious demand in parts of the consulting market.
Kepler Cheuvreux's analyst Håkon Nelson said the recent price decline appears to be an overreaction to these near-term challenges. The broker pointed to Bouvet's maintained margin levels and steady demand for projects in infrastructure, the public sector and defense-related work as evidence of the company's underlying resilience.
Capital return and balance sheet
The board proposed an ordinary dividend of NOK3 per share for fiscal year 2025, unchanged from the prior year's base payout. Kepler Cheuvreux noted that total cash returned to shareholders fell year-on-year because a supplementary dividend paid in fiscal 2024 was not repeated, although the base dividend remained stable.
At the end of 2024 Bouvet reported net cash of NOK354.1 million and generated free cash flow of NOK242.7 million for the year. Kepler Cheuvreux forecasts free cash flow of NOK480.4 million in 2026 and NOK491 million in 2027.
Forecast revisions and margin dynamics
In response to the quarter, Kepler Cheuvreux trimmed its revenue and earnings estimates. The firm's 2026 revenue estimate was reduced by 1.3% to NOK4.12 billion and its 2027 revenue forecast was cut by 1.1% to NOK4.33 billion. On an earnings-per-share basis, Kepler lowered its 2026 estimate by 0.9% to NOK3.8 and its 2027 estimate by 4% to NOK4.1.
The brokerage attributed the revisions primarily to lower utilization and a cost environment where salary growth of 4.3% is outpacing hourly rate increases of 3.3%, putting pressure on margins per employee. After the adjustments, Kepler Cheuvreux's 2026 revenue estimate sits 0.8% below consensus and its 2027 revenue forecast is 3% below consensus. At the EBIT level, the firm is 2% below consensus for 2026 at NOK507 million and 1.6% below for 2027 at NOK552 million.
Operational context and demand outlook
Headcount rose slightly in the quarter to 2,469 employees, continuing a stabilization trend observed through 2025. While utilization remained under pressure in the fourth quarter, Kepler Cheuvreux highlighted that hiring has been marginally positive over the last two quarters, which it interprets as an early sign that demand conditions are stabilizing.
Management signaled increased demand for projects that focus on improving efficiency and data utilization. Kepler Cheuvreux also commented on the potential impact of AI on Bouvet's market: it expects AI to reshape demand patterns rather than produce a structural reduction in demand, particularly for complex assignments that require integration, governance and change management.
Valuation and margins
Kepler Cheuvreux's NOK60 target implies a 2026 price-to-earnings ratio of 15.8 times, compared with a peer median of about 14.5 times. The broker considers this modest premium justified by Bouvet's relatively strong margins, stable client base and consistent cash generation.
Over the past five years Bouvet has averaged an EBITDA margin of 15%, above the peer median of 11% cited by Kepler Cheuvreux. At the current market price of NOK49.10, the stock trades at 13.0 times estimated 2026 earnings and 12 times 2027 earnings. Kepler's estimates imply an indicated dividend yield of 7.0% for 2026 and 7.6% for 2027, and a free cash flow yield of 9.4% in 2026.
Conclusion
Kepler Cheuvreux's upgrade of Bouvet reflects a view that recent market weakness overstates near-term operational pressures, while the broker's forecast cuts and commentary acknowledge the demand and margin risks that have affected the quarter. The firm retains a cautious stance on near-term utilization and cost inflation but highlights stabilizing hiring trends and resilient demand in targeted segments as reasons to favor the stock at its current valuation.