Last Update 07 Dec 25

Fair value Increased 2.65%

SHA0: Margin Outlook And Robotics Partnership Will Support Balanced Medium Term Upside

Analysts have nudged their price target on Schaeffler higher to EUR 5.00 from EUR 4.70, reflecting slightly stronger fair value expectations, underpinned by modest improvements in growth assumptions and a lower perceived discount rate.

Analyst Commentary

Bullish analysts view the incremental price target increase as a signal that execution risks have eased slightly. Recent operating performance supports a higher fair value range despite only modest adjustments to underlying assumptions.

They highlight that the updated target embeds a more constructive stance on Schaeffler's ability to defend margins and generate cash, even in a slower macro environment, while still recognizing that the valuation case is balanced rather than strongly asymmetric.

Overall, the revised fair value framework suggests that near term upside is more likely to be driven by consistent delivery against guidance and clearer evidence of sustainable growth, rather than by multiple expansion alone.

Bullish Takeaways

Bullish analysts see the target hike as confirmation that earnings resilience and cash generation assumptions have improved, modestly lifting the stock's fair value range.
The updated view implies confidence that Schaeffler can execute on operational efficiency measures, supporting stable to slightly better margins versus prior expectations.
They note that the valuation now better reflects reduced perceived risk premia, with less aggressive discounts applied to future cash flows.
The maintained neutral stance on the rating, despite a higher target, is interpreted as leaving room for potential upside if growth or margin delivery surpasses the current base case.

Bearish Takeaways

Bearish analysts emphasize that the rating remains cautious, indicating that the upside from the new price target is limited relative to execution and cyclical risks.
They argue that growth assumptions, while slightly higher, still rely on successful delivery of efficiency and transformation initiatives that carry implementation risk.
Concerns persist that the sector backdrop and exposure to cyclical end markets could cap multiple expansion, even if operational performance improves.
The modest scale of the target increase is seen as a signal that, despite some progress, the risk reward profile remains finely balanced rather than clearly compelling.

What's in the News

Schaeffler forms a long term strategic technology partnership with Neura Robotics to co develop and supply key components, including innovative actuators, for humanoid robots and to integrate a mid four digit number of humanoids into its global production network by 2035 (Key Developments)
The partnership with Neura Robotics focuses on joint capture and use of production and motion data to train AI models in the Neuraverse ecosystem, enabling humanoid robots to learn faster and perform industrial tasks more efficiently (Key Developments)
Schaeffler contributes its expertise in high torque, compact planetary gear actuators for humanoid joints such as shoulders, elbows, knees, and wrists, supporting continuous duty operation and heavy load handling (Key Developments)
Schaeffler Group USA launches the FAG OPTIME C4 multi point lubricator, capable of independently supplying up to four lubrication points with higher outlet pressure and fill volume to reduce lubrication related bearing failures (Key Developments)
The new FAG OPTIME C4, integrated with Schaeffler's wireless, app controlled OPTIME ecosystem, will be available to order from September 25, 2025, across most countries in Europe, the Americas, and Asia Pacific (Key Developments)

Valuation Changes

Fair Value: risen slightly from €6.78 to €6.96, indicating a marginally higher intrinsic value estimate.
Discount Rate: fallen moderately from 8.85% to about 8.25%, reflecting a lower perceived risk profile in the valuation model.
Revenue Growth: edged up marginally from 4.41% to approximately 4.41% (rounded), signaling an almost unchanged growth outlook.
Net Profit Margin: eased fractionally from 5.71% to about 5.71% (rounded), implying a broadly stable profitability assumption.
Future P/E: increased slightly from 5.0x to about 5.0x (rounded), pointing to a modestly higher multiple embedded in forward earnings expectations.

Expansion in electrified mobility and adoption of high-value, energy-efficient components are driving revenue growth, gross margin improvement, and premium segment positioning.
Enhanced scale, cost efficiency, and growing aftermarket services are set to boost earnings quality, net margins, and recurring revenue streams.
Heavy reliance on legacy segments, margin pressures, and elevated costs from restructuring expose Schaeffler to risks amid electrification shifts and limited flexibility for investment or growth.

Catalysts

About Schaeffler

Develops, manufactures, and sells components and systems for industrial applications in Europe, the Americas, China, and the Asia Pacific.What are the underlying business or industry changes driving this perspective?

Strong growth in E-Mobility (+10% sales in Q2, substantial outperformance vs. BEV market, and high quality/order intake like the new Chinese NEV contract) signals Schaeffler is successfully capitalizing on the shift to electrified mobility, which should drive top line expansion and improved gross margins.
Adoption of energy-efficient, high-value components (example: wind business growth in China, emerging strength in aerospace bearings, and ongoing order intake for industrial automation) positions Schaeffler to benefit from global carbon-reduction and energy efficiency trends, supporting both revenue growth and margin resilience as demand shifts toward premium products.
The accelerating mix shift to E-Mobility and hybrid systems, combined with significant order intake (notable book-to-bill strength in HEV) and synergies from the Vitesco merger, is expected to increase scale and drive both revenue diversification and margin expansion over the next few years.
Ongoing cost efficiency and capital allocation discipline (synergy realization ahead of plan, shrinking capital employed, and strict capex/workforce management) are set to boost net margins and free cash flow, with additional upside as transformation-related one-offs subside.
Growth in aftermarket and digital service businesses (noted for highest margins and recurring revenues within Vehicle Lifetime Solutions), along with rising industrial demand in selected segments, is likely to enhance earnings quality and support operating margin improvement through increased contribution from higher-margin and recurring revenue streams.

Schaeffler Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Schaeffler's revenue will grow by 7.7% annually over the next 3 years.
Analysts assume that profit margins will increase from -3.9% today to 5.1% in 3 years time.
Analysts expect earnings to reach €1.4 billion (and earnings per share of €1.01) by about September 2028, up from €-852.0 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 4.8x on those 2028 earnings, up from -6.2x today. This future PE is lower than the current PE for the GB Auto Components industry at 13.3x.
Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.52%, as per the Simply Wall St company report.

Schaeffler Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Exposure to declining internal combustion engine (ICE) powertrain demand remains a significant risk, as the Powertrain & Chassis division experienced falling sales and continues to be highly dependent on mature European OEMs, making future revenues vulnerable to the accelerating shift toward electrification.
Margin pressures from negative mix (with E-Mobility growing but still not covering fixed costs, and legacy segments declining) and persistent foreign exchange headwinds have already diluted group profitability, implying continued risks to net margins until the E-Mobility business reaches scale.
Schaeffler's high share of sales to European OEMs (e.g., Volkswagen, Mercedes, Stellantis) exposes it to regional cyclicality, greater bargaining power among consolidating automakers, and price competition, which may cause volatile or shrinking revenues and earnings, especially as procurement dynamics shift.
Increased R&D intensity in stagnating or shrinking segments such as chassis and ICE/hybrid platforms reflects high operating costs without commensurate sales growth, risking inefficient capital allocation and pressuring net margins if innovation does not translate into outsized market share gains.
Ongoing restructuring, integration costs following the Vitesco merger, and elevated debt levels (with leverage ratio above long-term target, and free cash flow suppressed by one-off costs) may constrain Schaeffler's ability to invest, maintain dividend growth, or respond to new market disruptions, limiting upside for earnings and shareholder returns.

Valuation

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

The analysts have a consensus price target of €5.536 for Schaeffler 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 €7.5, and the most bearish reporting a price target of just €4.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €27.2 billion, earnings will come to €1.4 billion, and it would be trading on a PE ratio of 4.8x, assuming you use a discount rate of 8.5%.
Given the current share price of €5.56, the analyst price target of €5.54 is 0.4% lower. 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.

Analysts Lift Schaeffler Price Target as Valuation Rises Despite Revised Growth Outlook