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Q2 misses, but we see signs of a gradually improving marketCatella's Q2 EBIT came in at SEK 8m, below ABGSCe of SEK 26m and FactSet consensus of SEK 15m, mainly reflecting weaker-than-expected earnings in Investment Management, while Corporate Finance was broadly in line. Despite the miss, we see encouraging signs, with AUM broadly stable and transaction activity gradually improving across several markets. We expect this to increasingly support Corporate Finance, while transaction-related fees within Investment Management are likely to follow with some lag. We trim our estimates following the Q2 earnings shortfallFollowing Q2, we lower our EBIT estimates by 25% for 2026e and 4% for 2027e, while raising 2028e by 1%. The near-term cuts reflect softer earnings in IM and CF, while our longer-term view is largely unchanged. Although activity is expected to remain subdued in the short term, Catella highlights a robust pipeline. As transaction markets normalise, improved transaction evidence should support property valuations, AUM, investor inflows and fee generation. We therefore expect a more meaningful earnings recovery through 2027-28e. Recovery still to be provenCatella is trading at 8.3x 2027e and 6.5x 2028e P/E, while its strong balance sheet continues to support capital returns. However, earnings remain subdued, and the expected recovery has been pushed further into the future. Positively, Catella repurchased 2.5m shares for SEK 52m during Q2 and, following the report, announced the early redemption of its SEK 600m 2028 bond. We view these measures as further evidence of disciplined capital allocation, but believe stronger earnings delivery is needed before we can take a more constructive view. |