Company Reports

We are maintaining our DKK 270 fair value estimate for narrow-moat GN Store Nord following first-quarter results. The market is responding positively to the results, but the shares remain undervalued.

We are maintaining our DKK 270 fair value estimate for narrow-moat GN Store Nord following fourth-quarter results. While the market is responding positively to the results, the shares remain undervalued, in our view.

GN Group consists of two businesses: hearing instrumentation and audio products/premium gaming gear. While a combination of hearing aids and consumer and professional audio solutions seemingly lacks symbiosis, we believe it opens up opportunities for GN Group to leverage its R&D and make inroads in the nonmedical hearables market. The hearing aid market deregulation in the U.S., with the introduction of the over-the-counter, or OTC, category, blurs the boundaries between medical and consumer devices. Consumers’ demand is shifting toward connectivity and interoperability in the devices they wear, regardless of product nature (medical or consumer). GN Hearing, being one of the early movers into the connectivity market, could allow the company to capitalize on these trends.

We are maintaining our DKK 270 fair value estimate for narrow-moat GN Store Nord following third-quarter results. We currently view the shares as undervalued.

We are maintaining our fair value estimate of DKK 270 for narrow-moat GN Store Nord despite yet another challenging quarter of performance in the Audio business. The hearing segment has managed to partly mitigate Audio's deterioration, and the cost-cutting has prevented the Audio margin from collapsing. We currently view shares as undervalued.

We are maintaining our fair value estimate of DKK 270 for narrow-moat GN Store Nord as management raises fiscal 2023 guidance given a strong start to the year in GN Hearing. The adjusted EBITA margin was 6%, down 0.8% from the first quarter of 2022 due in part to the OMNIA expansion, while revenue grew 7% organically. We currently view shares as undervalued.

GN Group consists of two seemingly unrelated businesses: hearing instrumentation and audio products/premium gaming gear. While a combination of hearing aids and consumer and professional audio solutions seemingly lacks symbiosis, we believe it opens up future opportunities for GN Group in the nonmedical hearables market. The hearing aid market deregulation in the U.S., with the introduction of the over-the-counter, or OTC, category, blurs the boundaries between medical and consumer devices. Consumers’ demand is shifting toward connectivity and interoperability in the devices they wear, regardless of product nature (medical or consumer). GN Hearing’s first-mover advantage in the connectivity market could allow the company to capitalize on these trends.

GN Store Nord, which previously announced its intent to increase share capital through a pre-emptive rights issue to existing shareholders for as much as DKK 7 billion in February, held its annual general meeting on March 15. The board of directors' proposal for the rights issue was withdrawn as advance votes and shareholder response voiced opposition. GN did comment that roughly half of the received votes were for the rights issue, but the proposal required a two-thirds majority to be passed, and so it was removed from the meeting agenda.

We anticipate a material decrease to our fair value estimate of narrow-moat GN Store Nord following our model update to include fiscal 2022 results. Hit from both sides with soft markets resulting in an organic revenue decline of 3% and increased costs, GN's EBIT margin dropped from over 15% in fiscal 2021 to just under 6% for the full year. Audio was particularly pressured between integrating SteelSeries and weak demand in the consumer market. Additionally, with many companies having invested in audio solutions during COVID, the enterprise portion of GN Audio had tough comparables.

We anticipate a moderate decrease to our fair value estimate of DKK 348 for narrow-moat GN Store Nord following the full publication of third-quarter results. Operating expenses remained at elevated levels due to high freight and material costs, resulting in a compressed adjusted EBIT margin of 10.5% in line with the prior quarter’s and down over one third from the third quarter of 2021.

We anticipate a modest decrease to our fair value estimate of DKK 348 for narrow-moat GN Store Nord on the back of continuing weakness in audio market demand in addition to the softening hearing market. We expect that shares will likely continue to trade in undervalued territory.

With the release of narrow-moat GN Store Nord’s third-quarter pre-close brief, we are maintaining our fair value estimate of DKK 348. Unsurprisingly, component shortages continue to plague the hearing and audio industries globally, and GN Audio is also seeing compressed consumer business demand driven by lower consumer sentiment. Management is maintaining the fiscal year guidance provided with its interim report in August, including mid- to high-single-digit core organic revenue growth in the hearing segment and low-single-digit organic growth for the audio segment. We currently view shares as undervalued.

We are maintaining our DKK 348 fair value estimate for narrow-moat GN Store Nord despite management’s downgrade of fiscal-year revenue growth expectations, with the largest change affecting the SteelSeries subsegment of GN Audio. We currently view the shares as moderately undervalued.

GN Group consists of two seemingly unrelated businesses: hearing instrumentation and audio products. While a combination of hearing aids and consumer and professional audio solutions seemingly lacks symbiosis, we believe it opens up future opportunities for GN Group in the nonmedical hearables market. The hearing aid market deregulation in the U.S., with the introduction of the over-the-counter, or OTC, category, blurs the boundaries between medical and consumer devices. Consumers’ demand is shifting toward connectivity and interoperability in the devices they wear, regardless of product nature (medical or consumer). GN Hearing’s first-mover advantage in the connectivity market could allow the company to capitalize on these trends.

We anticipate a decrease in the range of 5%-10% to our fair value estimate of DKK 395 for narrow-moat GN Store Nord following completion of model updates for first-quarter results. GN was pinched between halted sales in Russia, continuing COVID-19 lockdowns in Asia, and supply chain challenges in addition to high Audio-segment comparables, resulting in negative organic growth of 21% to DKK 3.86 billion. We currently view shares as undervalued when considering the anticipated fair value decrease.

We are currently maintaining our fair value estimate of DKK 395 for narrow-moat GN Store Nord as we update our model following fiscal 2021 results. Organic revenue was just below our model forecasts for the year at 20% growth to DKK 15.8 billion. The hearing segment revenue grew by 16% as the hearing market recovered from the global coronavirus pandemic and audio contributed a 22% revenue increase over strong comparables in fiscal 2020. We currently view shares as fairly valued.

We are maintaining our fair value estimate of DKK 395 for narrow-moat GN Store Nord following third-quarter results. Management decreased fiscal 2021 revenue growth expectations for GN Audio after lowering fiscal-year revenue growth expectations for GN Hearing in early October. We currently view shares as fairly valued.

We are maintaining our DKK 395 fair value estimate for narrow-moat GN Store Nord following revised fiscal 2021 guidance for the hearing segment as the company is delaying product launches scheduled for the second half of the year. GN also provided a preliminary third-quarter revenue figure of DKK 1,346 million for the hearing segment, still well below its prepandemic third-quarter 2019 number of DKK 1,537 million but showing recovery from 2020. Our modeled forecast is in line with the new target, and thus this update does not affect our fair value estimate. We currently view the shares as fairly valued.

GN Group consists of two seemingly unrelated businesses: hearing instrumentation and audio products. While a combination of hearing aids and consumer and professional audio solutions seemingly lacks symbiosis, we believe it opens up future opportunities for GN Group in the nonmedical hearables market. The recent hearing aid market deregulation in the U.S., with the introduction of the over-the-counter, or OTC, category, blurs the boundaries between medical and consumer devices. Consumers’ demand is shifting toward connectivity and interoperability in the devices they wear, regardless of product nature (medical or consumer). GN Hearing’s first-mover advantage in the connectivity market should allow the company to capitalize on these trends.

We are currently maintaining our fair value estimate of DKK 395.00 for narrow-moat GN Store Nord following second-quarter results. As anticipated, given easy comparables in the hearing segment, GN saw strong recovery in the segment in the second quarter. More impressively, GN’s audio segment also delivered robust results. We view shares as overvalued.