NORDIC SEMICONDUCTOR CES 2018; Cellular IoT preview Following our recent visit to CES 2018, our confidence in the prospects for the company’s cellular IoT business in Finland has increased. We believe Nordic Semiconductor’s presentation today will increase investor confidence in its cellular IoT investment and help to change sentiment towards the underlying value of its core BLE business. We reiterate our BUY recommendation and have raised our target price to NOK65 (49).
Increased confidence in prospects for cellular IoT business. On the back of our recent visit to CES 2018 in Las Vegas, our confidence in the prospects for Nordic Semiconductor’s low-power cellular IoT (internet of things) business in Finland has increased. After meeting companies in various parts of the cellular IoT value chain (operators, module vendors, consumer electronics), we are increasingly confident that Nordic Semiconductor has the potential to take a strong position in this market.
Today’s presentation on low-power cellular IoT business. The company is to host a presentation on its low-power cellular IoT business today at 17:00 CET (webcast here), to give greater insight into its new nRF91 product series. At the event we expect it to: 1) launch an LTE Cat-M1 system-on-chip with a high level of integration, low power consumption, and small size; and 2) share more information on its go-to-market strategy, which we believe might include a proprietary LTE Cat-M1 module and cloudbased development platform, with a focus on the long tail.
Target price raised to NOK65; BUY reiterated. We believe the low granularity and transparency offered by the company on its cellular IoT-related investments in Finland has weighed on the market valuation. We expect this to change, as increased transparency and news flow offered by the company on its LTE-M business drives investor confidence in its investments, and thus helps to visualise the underlying value of the core BLE business. Our increased target price of NOK65 (49) is based on a 24month forward EV/EBITDA of 14.5x on our 2019 estimate (excluding Finland opex), and a value of NOK5 (unchanged) attributed to its cellular IoT business in Finland.