Securing Battlefield Communications; INITIATE with BUY

At the core of the story lies Defense & Security, accounting for roughly two-thirds of group revenues and poised to grow rapidly amid Europe’s defense modernisation drive. The war in Ukraine has rewritten military procurement priorities, and battlefield communications, the invisible nervous system of modern warfare. Bittium’s software-defined radios (SDRs) and autonomous tactical backbone networks (TAC WIN) offer precisely what European militaries now seek: independence from civilian infrastructure, full interoperability within NATO, and resilience against jamming or interception. In this field, only a handful of vendors exist, yet Bittium clearly stands out.

The company’s recent strategic partnership with Spain’s Indra, following Madrid’s decision to cut defense ties with Israeli suppliers, could prove transformational. If formalised, the framework would not only confirm Bittium’s technological leadership but also open the door to large-scale European tenders worth hundreds of millions over the coming decade. Finland’s entry into NATO further amplifies visibility, turning the Finnish Defense Forces, Bittium’s long-time development partner, into a powerful reference case for allied nations.

Beyond defense, Bittium leverages its core competencies in biosignal quality and secured wireless transfer to build medical devices for remote cardiac and sleep monitoring. This segment, long overshadowed by defense, is now regaining focus under a new leadership and with a sharper strategy centered on AI-enabled diagnostics and disposable electrodes. The combination of biosignal excellence and introducing an AI-based analytics software could transform Bittium’s Medical technology into a second pillar of growth.

Engineering Services acts as a problem solver, leveraging Bittium’s deep R&D legacy and expertise. Besides serving own customers, it also supports the Defense & Security and Medical businesses. This strengthens customer relationships and provides steady, profitable growth through advanced design and integration projects.

Figures are seen to increasingly reflect the company’s high competitive quality and growth opportunities within the respective markets. As group sales should grow by 22% annually (2024-28e), the EBIT margin is seen to approach 20%. Thanks to the rather capital light set-up of operations, ROCE’s of 15-20% are also expected during the near-term.

Bittium is transforming from a Finnish niche technology firm into a key European provider of secure communications and medical connectivity, combining defense-scale growth with disciplined execution and rising profitability. We initiate with a BUY and a € 23.50 price target based on DCF.