Since the beginning of 2025, the Nasdaq OMX 10 Baltic Index of the most liquid stocks in Estonia, Latvia and Lithuania has grown by 13.5%, while the OMX Baltic Benchmark Index with the 19 most traded stocks from these three countries has grown by 12.9%. Both outperformed the Euro Stoxx 50 Index, which rose by just over 10% over the same period. The Stoxx Europe 600 broad market index rose about 9% over the same period. What should an investor pay attention to if he wants to add shares of the region's companies to his portfolio?

What is the Baltic stock market?

In the Baltics operates Nasdaq Baltic, a combined platform of three stock exchanges in Estonia, Latvia and Lithuania and a depository. It trades shares of 34 companies on the main list and 17 stocks with lower liquidity on the secondary list;

Currently, the index with the most liquid shares includes securities of nine companies: Lithuanian Artea Bankas, LHV Group, Ignitis grupe, Telia Lietuva and Estonian Coop Pank, Merko Ehitus, Tallink Grupp, Tallinna Sadam and TKM Grupp.

One of the reasons for the growth of the Baltic index since the beginning of this year may be the easing of the ECB's monetary policy - on June 5, the regulator reduced rates for the seventh time in a row.

The stock market in the Baltic States is particularly affected by the size of the rates. One of the reasons may be the high share of floating rate loans in the economy. According to ECB data as of April 30, 2025, the share of such loans from households and non-financial companies in the EU was 64.4%, while in Latvia the figure was 92.4%, in Lithuania - 88.3%, and in Estonia - 95.3%.

What's the state of the economy?

The economic situation in the Baltic States is developing in different ways, analysts at Citadele Bank stated;

Lithuania remains the leader in economic growth. After a 0.3% drop in GDP in 2023, the economy in 2024 grew by 2.7%. But, Citadele analysts wrote, they saw «serious risks» here that they plan to monitor. In December 2024, the first signs of stagnation or a slight decline in exports of Lithuanian-origin goods to Germany began to appear, which could indicate the effects of a weakening German economy. «Nevertheless, given the increased willingness of German industrial companies to seek contractors outside Germany to regain competitiveness, we do not see significant risks to Lithuanian exports,» the analysts wrote in the report.

Latvia is coming out of the «plateau» phase: in the fourth quarter of 2024 there are signs of economic recovery, Citadele analysts wrote, the drivers of the economy are the retail sector and the building materials industry. The country's GDP decreased by 0.4% in 2024.  

Estonia has been in recession for the longest time in the region, but in the fourth quarter of 2024 there are signs that the downturn in the country's economy is over. Analysts at Citadele Bank believe that the country is on its way to a gradual return to growth. Although GDP at the end of 2024 decreased by 0.3%, the economy grew at a 1.2% annualized rate in the fourth quarter. The industrial, service sector improved toward the end of the year. Private consumption grew by 1.2% year-over-year. Exports of goods and services grew by 3.2% in 2024. According to Citadele Bank, this happened thanks to close ties with Scandinavia - which accounts for a third of all Estonian exports. «We believe that much of Estonia's export recovery can be attributed to the positive effect of lower credit rates in Scandinavian countries,» the bank said in its materials.

According to Citadele Bank's forecast, Latvia's GDP will grow by 2.2%, Lithuania's by 2.9% and Estonia's by 2.4% in 2025. One of the key factors of growth will be the decrease in the cost of borrowing and the increase in purchasing power in the Baltic States. The Bank forecasts that in Latvia and Lithuania average wages will increase by 7% in 2025, with inflation rates of 2.2% in Latvia and 2.7% in Lithuania. In Estonia, wage growth may reach 5.3%, while inflation will be 3.3%.

The main risks for the region remain duties, as well as the impact on exports from Germany, Citadele analysts wrote. 

What companies in the region are being highlighted by investment banks? 

 Given the improving economic situation in the Baltic States and the easing of the ECB's monetary policy, the investment attractiveness of Baltic equities is increasing;

One of Norway's largest investment banks Norne Securities wrote in its report on May 20 about Lithuanian energy company Ignitis Group. Norne Securities estimates the fair value of the company's shares at 31.9 euros in the baseline scenario, in the negative scenario it could be 24 euros, in the positive scenario it could rise to 39.4 euros. The closing price on June 10 was 21.4 euros. That is, according to Norne Securities, the company's securities should be worth 49% more in the baseline scenario;

Investment Bank forecasts Ignitis Group's dividend yield in 2025 at 6.4%, which is noticeably higher than the market average of 4.8%, the bank said in its materials. The company's policy provides for annual dividend growth of 3%, which, along with stable income, gives the shares protective qualities, the bank's analysts wrote;

The key growth factor is the increase in the company's green energy capacity: by the end of 2024 it amounted to 1.4 GW, by 2028 Ignitis plans to increase capacity to 2.6-3 GW. Geographical diversification of supply  (Lithuania, Latvia, Estonia, Poland) and a wide range of generation (wind, solar, hydro, biomass) reduce risk factors for the company.

According to Refinitiv, three investment banks recommend buying the company's shares, with an average target price of €26.2.

Investment bank JPMorgan on June 6 began coverage of shares of Lithuanian Baltic Classifieds Group (BCG) and set a target price of £4.32, up 20% from the closing price on June 10. The company is a leader in the internet portal sector in the Baltic States and manages a portfolio of websites in the automotive, real estate, jobs and general classifieds sectors. The investment bank forecasts average annual revenue BCG growth of 14% through 2028 and EBITDA growth of 15%. JPMorgan notes that on an EV/EBITDA multiple (the ratio of the company's value to its earnings before interest, taxes and amortization) it is already valued above the market -24.2 versus 18.4. But, according to the investment bank, this valuation is justified due to the company's high earnings growth potential.

BNP Paribas issued a note on Baltic Classifieds Group on May 8. The investment bank's team has an «outperform» rating for this company's stock, with a target price of £3.5, about 2.8% below the closing price on June 10. Investment Bank wrote that BCG is in the early stages of monetizing its audience, but the company has significant potential to do so, and thus prospects for revenue growth and stronger profitability. Lithuania's GDP growth continues to be strong and Estonia's economy is recovering from a slowdown, creating a favorable environment for online services, BNP Paribas analysts wrote. According to Refinitiv, out of eight analysts, three of them recommend buying the company's shares, while the others recommend holding. The average target price is £3.6.

Nordea Markets, one of Scandinavia's largest investment banks, wrote in a May 13 report that the fair share price of Estonia's largest port operator Tallinna Sadam is in the range of 1.4-1.7 euros. The closing price on June 10 was 1.2 euros, meaning the upside potential is 16.7-41.7%.   

The investment bank listed the factors that will contribute to the company's value growth. Tallinna Sadam plans to sell or lease unused land plots and bring the first two of them to the market by the end of 2025. At the beginning of 2026, a new berth in Paldiski, Estonia's second largest cargo port, should be operational. This will increase its throughput capacity. The company is also considering ordering a multifunctional service vessel worth 80-90 million euros, which will be used for laying and repairing submarine cables. It will make a final decision on this investment by the end of 2025, Nordea Markets writes. The state plans to reduce its stake in the company from 67% to 51% between 2026 and 2027. This could boost liquidity and attract new investors, the investment bank's analysts said.

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