Electrification And Automation Will Expand End-Markets Across Industries

AN
AnalystHighTarget
AnalystHighTarget
Not Invested
Consensus Narrative from 7 Analysts
Published
28 Jul 25
Updated
28 Jul 25
AnalystHighTarget's Fair Value
€57.00
56.9% undervalued intrinsic discount
28 Jul
€24.55
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1Y
-42.2%
7D
-1.8%

Author's Valuation

€57.0

56.9% undervalued intrinsic discount

AnalystHighTarget Fair Value

Key Takeaways

  • Faster-than-expected integration and cross-selling from acquisitions, along with advanced automation and digitalization, position Stabilus for strong outperformance in margins and revenue.
  • Expansion into non-automotive markets and eCommerce, combined with rising industrial automation demand, will drive diversified growth, margin improvement, and recurring revenue streams.
  • Heavy reliance on declining automotive markets and traditional products, combined with rising costs and pricing pressures, threatens Stabilus' margins and long-term revenue stability.

Catalysts

About Stabilus
    Manufactures and sells gas springs, dampers, electromechanical damper opening systems, vibration isolation products, and industrial components in Europe, the Middle East, Africa, North and South America, the Asia-Pacific, and internationally.
What are the underlying business or industry changes driving this perspective?
  • Analyst consensus anticipates significant sales and cost synergies from the DESTACO acquisition, but this likely understates the upside as cross-selling momentum is accelerating faster than expected, evidenced by fourfold growth in industrial automation sales and robust integration, positioning Stabilus for outperformance on both revenue and EBIT margin through 2027–2028.
  • While analysts expect gradual margin improvement from supply chain optimization and automation investments, Stabilus is deploying front-loaded CapEx into advanced robotics and digitalization, likely enabling step-change gains in manufacturing efficiency and operating leverage-an impact that could drive adjusted EBIT margins above the upper end of guidance in the next 2–3 years.
  • Surging demand for automation and electrification solutions across multiple industries, amplified by labor shortages and re-shoring/nearshoring of global manufacturing, puts Stabilus in an advantageous position for sustained high-single-digit revenue growth and increased pricing power, well beyond GDP rates, underpinning longer-term topline acceleration.
  • Stabilus is rapidly expanding into fast-growing non-auto end-markets including medical technology, aerospace, and aftermarket channels, with recent business wins (such as with Li Auto and a 45% win rate for Powerise in Q2) demonstrating outsized market share gains that will diversify earnings, enhance resilience, and lift both gross margin and net margin.
  • The company's acceleration of eCommerce initiatives-including customizable actuator solutions and a sharply increased digital aftermarket presence-will unlock new recurring revenue streams, higher gross margins, and improved free cash flow conversion as digital channels scale.

Stabilus Earnings and Revenue Growth

Stabilus Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?
  • This narrative explores a more optimistic perspective on Stabilus compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
  • The bullish analysts are assuming Stabilus's revenue will grow by 4.5% annually over the next 3 years.
  • The bullish analysts assume that profit margins will increase from 4.9% today to 8.4% in 3 years time.
  • The bullish analysts expect earnings to reach €128.9 million (and earnings per share of €5.2) by about July 2028, up from €65.8 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 13.6x on those 2028 earnings, up from 9.9x today. This future PE is lower than the current PE for the GB Machinery industry at 19.8x.
  • Analysts expect the number of shares outstanding to grow by 0.29% per year for the next 3 years.
  • To value all of this in today's terms, we will use a discount rate of 8.71%, as per the Simply Wall St company report.

Stabilus Future Earnings Per Share Growth

Stabilus Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?
  • The accelerating shift to electric vehicles is reducing demand for traditional automotive gas springs and hydraulic applications, with Stabilus acknowledging organic market decline and negative growth rates in key regions like Asia Pacific, signaling future revenue and margin headwinds as the sector modernizes.
  • Ongoing global price pressure in China and fierce competition from local suppliers like BYD and Asian manufacturers are squeezing Stabilus' pricing power, with management noting a 5% year-over-year price erosion on Powerise systems and projecting only partial recovery, which impacts EBIT margins and makes long-term earnings growth less reliable.
  • Stabilus remains heavily dependent on the automotive sector-still at 54% of its business-even as OEM platforms migrate to EVs and localize more of their supply chain; this over-exposure risks both top-line revenue declines and stagnation if EV growth materially reduces the need for Stabilus' legacy components.
  • Rising input costs for steel, aluminum, and electronics, compounded by ongoing tariff uncertainties and the risk of further protectionist measures, threaten to erode net margins; although some costs are passed on to customers, delays in negotiation and limited ability to offset structural cost increases put sustained profit margins at risk.
  • The increasing adoption of electronic actuation, automation, and predictive maintenance in industrial and automotive applications constricts the addressable market for mechanical solutions, raising the risk that Stabilus, with limited R&D scale compared to diversified peers and an emphasis on traditional products, may lose market share and future earnings potential as secular industry shifts accelerate.

Valuation

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

  • The assumed bullish price target for Stabilus is €57.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Stabilus'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 €57.0, and the most bearish reporting a price target of just €26.0.
  • In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be €1.5 billion, earnings will come to €128.9 million, and it would be trading on a PE ratio of 13.6x, assuming you use a discount rate of 8.7%.
  • Given the current share price of €26.3, the bullish analyst price target of €57.0 is 53.9% 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.

How well do narratives help inform your perspective?

Disclaimer

AnalystHighTarget 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 AnalystHighTarget 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 AnalystHighTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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