We apply a 10% CAPM-derived cost of equity to our DCF model, forecasting P&L to FY 2026 and thereafter assuming 7% pa growth in profits to FY 2032. We then apply a 4.0% terminal growth rate to derivate a 12-month forward target price of SEK400 per share.

Key risks to our TP include: Should Swedish household balance sheets remain under pressure for longer than expected, Avanza's net flows and brokerage activity may disappoint versus consensus expectations. Avanza has recently appointed a new CEO, who has yet to outline new financials targets and a clearer corporate strategy. We expect him to announce a growth focused strategy, which may require more investment than we and consensus currently model. However, due to Avanza's high operating margins, a 10% increase in the cost base would only have a c5% drag on EPS, all else equal.