Last Update 11 Dec 25

Fair value Increased 2.35%

HOLN: European Cement Regime Will Offset Demand Risks And Circular Expansion Challenges

The analyst fair value estimate for Holcim has been raised to approximately CHF 74.90 from CHF 73.20. This reflects analysts' more constructive view on the company's positioning in a stronger European cement regime and recent upward revisions to Street price targets, despite some concerns about near term sales trends.

Analyst Commentary

Analyst sentiment on Holcim remains skewed positively, with several recent target price increases reflecting confidence in the companys ability to execute in a structurally stronger European cement market. At the same time, some more cautious voices highlight execution and demand risk, which tempers expectations for near term growth.

Bullish Takeaways

Bullish analysts point to rising target prices, up into the high CHF 70s, as evidence that improving pricing power and disciplined capacity management can support further upside to the current fair value.
Several target hikes assume Holcim can sustain margin expansion in a tighter European cement regime, which, if delivered, would justify a premium valuation versus historical averages.
Supportive views emphasize that Holcim offers one of the cleanest exposures to the new European cement cycle, with scale and geographic mix that could translate into above sector earnings growth.
Recent upgrades embed expectations that management can execute on cost efficiencies and portfolio optimization, underpinning mid term free cash flow growth and enhanced shareholder returns.

Bearish Takeaways

Bearish analysts argue that current sales guidance is too optimistic given continuing signs of weak demand trends, raising the risk of earnings disappointments versus elevated expectations.
More cautious views highlight that the stock has already rerated on the new regime narrative, limiting upside if pricing gains moderate or volumes fail to recover as quickly as modeled.
There is concern that execution slippage on growth and cost initiatives could erode the assumed margin uplift, challenging the justification for higher target prices.
Some see a risk that consensus is underestimating potential volatility in construction activity, which could pressure top line growth and delay the realization of the full value embedded in recent upgrades.

What's in the News

Holcim completed two acquisitions and agreed a third deal for demolition materials recycling businesses in the United Kingdom, Germany, and France, adding about 1.3 million tons of annual permitted processing capacity to accelerate its circular construction strategy in Europe (company release).
The acquisition of Thames Materials in West London extends Holcim’s circular construction services across Greater London and builds on its 2023 purchase of Sivyer Logistics, strengthening its position in the United Kingdom recycling market (company release).
Holcim acquired a majority stake in A&S Recycling GmbH’s business in Hanover, taking its German recycling hubs to 10, and agreed to acquire a Northwest France recycler, which will increase its French recycling centers to 28 and scale its ECOCycle circular construction technology (company release).
Holcim confirmed its full year 2025 guidance, targeting net sales growth of 3% to 5% and recurring EBIT growth of 6% to 10% in local currency, with a recurring EBIT margin above 18 percent and performance aligned with its NextGen Growth 2030 plan (company guidance).

Valuation Changes

Fair Value Estimate increased slightly from CHF 73.20 to CHF 74.92, reflecting a modestly more positive long term outlook.
Discount Rate nudged higher from 5.22 percent to about 5.23 percent, implying a marginally higher required return in the valuation model.
Revenue Growth was revised to a slightly less negative trajectory, from around minus 12.90 percent to about minus 12.28 percent, indicating a modest improvement in expected top line trends.
Net Profit Margin was trimmed slightly from roughly 13.50 percent to about 13.20 percent, signaling a small reduction in anticipated profitability.
Future P/E increased modestly from about 20.2x to approximately 20.7x, suggesting a somewhat higher multiple being applied to forward earnings.

High expectations for demand growth and margin expansion may be difficult to meet if market, regulatory, or competitive conditions shift unfavorably.
Risks around regulatory costs, disruptive new materials, and integration of acquisitions could undermine profitability and long-term growth assumptions.
Holcim's focus on sustainable products, targeted acquisitions, decarbonization, and disciplined financial management positions it for resilient growth, margin strength, and industry leadership.

Catalysts

About Holcim

Provides building materials and solutions worldwide.What are the underlying business or industry changes driving this perspective?

Market participants appear to be pricing in aggressive and sustained demand growth expectations for Holcim, primarily driven by heavy infrastructure investments and ongoing urbanization, particularly in emerging markets like LatAm and Asia, as well as robust pipelines in Europe and Mexico. If these anticipated structural drivers are overestimated, future revenue growth may fall short of current high expectations.
The valuation seems to reflect optimism that Holcim will maintain significant pricing power and margin expansion due to accelerating adoption of sustainable construction materials, including premium-priced green products like ECOPact and ECOPlanet. If regulatory changes or heightened competition lead to price pressures or if volume growth lags, the current net margin assumptions could prove overly optimistic.
There appears to be an assumption that regulatory trends-especially the push for decarbonization-will remain a net tailwind for Holcim, supporting revenue growth and product mix improvement. However, stricter emissions benchmarks and phasing out of carbon allowances in Europe could lead to higher compliance and operating costs, eroding profitability and putting pressure on future earnings.
Long-term capital allocation and large, ongoing M&A are assumed to be both seamless and highly accretive to earnings, with few execution risks priced in. If Holcim faces integration challenges, delays, or fails to realize anticipated synergies from recent and future acquisitions, this could negatively affect reported earnings and return on invested capital.
The market may be underestimating the impact of alternative building materials (timber, modular, etc.) and slower population growth/urban densification in developed markets, which could cap the long-term baseline demand for cement and concrete, ultimately pressuring revenue growth and possibly resulting in lower-than-expected future EPS.

Holcim Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Holcim's revenue will decrease by 11.9% annually over the next 3 years.
Analysts assume that profit margins will increase from 12.1% today to 13.4% in 3 years time.
Analysts expect earnings to reach CHF 2.4 billion (and earnings per share of CHF 4.31) by about September 2028, down from CHF 3.2 billion today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting CHF2.7 billion in earnings, and the most bearish expecting CHF1.9 billion.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 17.4x on those 2028 earnings, up from 11.1x today. This future PE is lower than the current PE for the GB Basic Materials industry at 17.7x.
Analysts expect the number of shares outstanding to grow by 0.22% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 4.92%, as per the Simply Wall St company report.

Holcim Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Holcim is successfully scaling up its sustainable product offerings (ECOPact, ECOPlanet, ECOCycle) and premium brands, with demonstrated margin expansion and evidence of strong customer demand and price premiums in major regions, which supports higher net margins and resilient revenue growth over time.
The company is aggressively deploying capital towards value-accretive M&A, especially bolt-ons and high-value building solutions, with a strong deal pipeline and track record of integrating acquisitions, which is likely to augment both earnings growth and revenue diversification.
Sustained investments and leadership in decarbonization, circular construction, and innovation (including net-zero cement initiatives and supplementary cementitious materials) position Holcim ahead of industry regulatory trends, enabling it to secure new revenue streams, access premium markets, and defend margins amid tightening climate rules.
Holcim's strategy to leverage growth in global infrastructure, urban regeneration, and housing shortages-especially in high-growth markets like Latin America, Asia, Africa, and strong country-level projects in Europe-provides multi-year baseline demand, supporting organic sales and recurring EBIT growth.
Prudent financial management, with a robust investment-grade balance sheet, low net debt leverage, and a commitment to progressive dividends and potential share buybacks, enhances the company's ability to generate attractive shareholder returns and cushion earnings through economic cycles.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of CHF66.956 for Holcim based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of CHF79.3, and the most bearish reporting a price target of just CHF51.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be CHF17.9 billion, earnings will come to CHF2.4 billion, and it would be trading on a PE ratio of 17.4x, assuming you use a discount rate of 4.9%.
Given the current share price of CHF65.08, the analyst price target of CHF66.96 is 2.8% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
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.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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