Q4 report due on 17 February

We lower our adj. EBIT estimates due to the second wave

10x adj. EV/EBIT on ’21e, 10% adj. ROIC

Improvements versus Q3, but growth rates remain negative
Doro’s 2020 sales were hit hard by the pandemic, especially its Phones division, which partly stems from the fact that the company’s main target market is the senior population. In Q2, Phones declined -41% y-o-y, while the corresponding metric was -21% in Q3. This has created a pent-up demand, we argue. As such, we saw a good setup for improved growth rates in Q4. However, because the second wave of the pandemic resulted in lockdowns beginning in mid-November in several of Doro’s key markets, we estimate that Phones will deliver -18% organic growth y-o-y in Q4. For Care, we believe that Doro’s sales have held up well, and we forecast 5% y-o-y growth for that business unit (-4% organic). For the Group, we forecast Q4 sales of SEK 515m, -16% y-o-y (-15% organic). Although the sales mix continues to improve (entailing higher gross margins), coupled with the fact that Doro sees a tailwind from its restructuring programme, we estimate adj. EBIT growth of -13% y-o-y, hurt by the lower sales. Although we note that recent USD/EUR movements have been favourable for Doro’s gross margins, we think that higher freight costs will offset most of the benefits.

Adj. EBIT ’20e-’22e reduced by 4-6%, due to the second wave
We now anticipate a slower recovery for Phones, and reduce our estimates accordingly. We keep our Care sales forecasts relatively intact, and continue to believe that Care should find improved growth rates in 2021e once the dust settles. Please note that we have pushed some of our estimated non-recurring items from Q4’20 into 2021e, leading us to raise our 2020e reported EBIT by 9% but cut our 2021e EBIT by 14%.

0.8x NIBD/EBITDA on 2021e
Doro continues to transition into a telecare company, both organically and through M&A. In 2020, the firm completed three acquisitions, and we believe that th
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