Global 5G And EV Rollout Will Drive Next-Generation Connectivity

Key Takeaways

• Rapid adoption of advanced optical and charging technologies, along with readiness for new standards, positions the company for outsized revenue and margin expansion ahead of expectations.
  
• Strategic M&A, localization in high-growth regions, and core roles in next-gen network infrastructure make the company highly resilient and poised for sustained growth.
  
• Heavy dependence on volatile projects, shrinking margins from price pressure, geopolitical risks, market concentration, and costly R&D threaten stable growth and profitability.

Catalysts

Engages in the provision of electrical and optical connectivity components and system solutions.

• Analyst consensus sees innovation in all optical switches and hollow-core fiber as a solid growth driver, but this underestimates the near-term potential for rapid, mass deployment with major hyperscaler customers, accelerated by substantial investments already made in new manufacturing capacity, which could catalyze a step-change in both top-line revenue and gross margins as early as 2025.
  
• Analysts broadly agree that Huber+Suhner's dominant position in high-power charging will fuel growth as EV adoption rises, yet the company's proactive adaptation to the new NACS (Tesla) standard and readiness for megawatt charging uniquely position it to capture disproportionate share as new U.S. and European infrastructure rollouts are unlocked, likely driving revenue and margin expansion well above market expectations.
  
• The ongoing global build-out of 5G and early moves towards 6G place Huber+Suhner at the technological forefront, as it supplies essential high-frequency and high-capacity connectivity components, setting up the company to benefit from sustained, multi-year double-digit growth in network infrastructure demand and increasing its earnings visibility.
  
• Huber+Suhner's strong financial position and now explicit pursuit of strategic M&A in high-growth domains (such as Aerospace & Defense and advanced industrial connectivity) could materially accelerate earnings per share through synergies, expansion into higher-margin segments, and improved capital allocation.
  
• The company's accelerating shift toward localization in fast-growing regions like India and China, together with flexible cost structures and deep local talent, makes it uniquely resilient to geopolitical and trade risks, enabling consistent market share gains and structural improvements in operating margins.

Huber+Suhner Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Huber+Suhner compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Huber+Suhner's revenue will grow by 12.1% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 8.0% today to 10.3% in 3 years time.
• The bullish analysts expect earnings to reach CHF 129.5 million (and earnings per share of CHF 6.99) by about August 2028, up from CHF 71.4 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 19.6x on those 2028 earnings, down from 28.2x today. This future PE is lower than the current PE for the GB Electrical industry at 28.6x.
• Analysts expect the number of shares outstanding to decline by 0.07% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 5.53%, as per the Simply Wall St company report.

Huber+Suhner Future Earnings Per Share Growth

Risks

• The heavy reliance on large, one-off projects in markets like India creates volatility and uncertainty, with management explicitly stating that the replacement of a major Indian order in the Communication segment is not guaranteed, which could lead to flat or declining sales and pressure on future revenues.
  
• Intensifying price competition and increasing commoditization in core connectivity products-especially in Communication-reduces Huber+Suhner's pricing power, risking shrinking margins and an erosion of long-term profitability as industry buyers exert more leverage.
  
• Geopolitical instability, growing protectionism and changing regional standards (such as U.S. and European electric vehicle charging connectors or tariffs on imported goods) threaten Huber+Suhner's global supply chains, potentially raising costs, limiting market access, and putting future international revenues at risk.
  
• Persistent softness and slow recovery in the Automotive sub-segment, as well as delays in the wider electrification of commercial vehicles, exposes the company to cyclical downturns, increasing overdependence on a few key markets and making future revenue streams vulnerable to demand swings.
  
• The need for constant high levels of R&D and innovation investment amid delays in commercial breakthroughs for new technologies like optical switches and hollow core fibers poses a risk to net margins and earnings growth, particularly if these investments do not translate into timely, substantial new revenue streams to offset market headwinds.

Valuation

• The assumed bullish price target for Huber+Suhner is CHF120.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Huber+Suhner's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of CHF120.0, and the most bearish reporting a price target of just CHF80.0.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be CHF1.3 billion, earnings will come to CHF129.5 million, and it would be trading on a PE ratio of 19.6x, assuming you use a discount rate of 5.5%.
  
• Given the current share price of CHF109.0, the bullish analyst price target of CHF120.0 is 9.2% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.