NEM: Digital Construction Adoption Will Drive Premium Multiples Despite Mixed Near-Term Sentiment

Nemetschek's analyst price target has been trimmed slightly to about EUR 123 from roughly EUR 124 as analysts balance strong growth expectations in construction software, along with recent Buy initiations and upgrades, against a marginally higher discount rate and mixed target revisions.

Analyst Commentary

Analysts remain divided on Nemetschek's near term valuation, but are broadly constructive on its long term growth profile and strategic positioning within construction software.

Bullish Takeaways

• Bullish analysts highlight Nemetschek's exposure to construction software as a key structural growth driver, pointing to the sector's relatively low level of digital penetration and long runway for adoption.
• Several note confidence that Nemetschek can sustain one of the highest growth rates in its peer group, supporting premium valuation multiples despite recent macro uncertainty.
• Upgrades and Buy initiations emphasize that earlier concerns around execution risk are easing, with improving visibility on the product roadmap and transition to subscription and SaaS models.
• The combination of double digit top line growth expectations and expanding recurring revenue is seen as supportive of further earnings upgrades over the medium term.

Bearish Takeaways

• Bearish analysts remain cautious on the current valuation, arguing that much of the long term digitization upside in construction is already reflected in the share price.
• There is some concern that slower macro trends in construction and architecture spending could weigh on near term license growth, creating downside risk to consensus estimates.
• More conservative voices point to limited room for multiple expansion from current levels, particularly if execution on cloud migration or cross selling falls short of expectations.
• A subset of analysts prefers to wait for a more attractive entry point, citing a less favorable risk reward profile relative to other high growth European software names.

What's in the News

• Reconfirmed 2025 earnings guidance, expecting currency adjusted revenue growth of 20% to 22 percent, including around 450 basis points of contribution from the GoCanvas acquisition, which underlines management confidence in sustained high growth. (Company guidance)

Valuation Changes

• Fair Value: Trimmed slightly to about €123.15 from roughly €123.68, reflecting only a marginal downward adjustment.
• Discount Rate: Risen slightly to around 6.42 percent from approximately 6.34 percent, indicating a modest increase in perceived risk or required return.
• Revenue Growth: Essentially unchanged at about 13.85 percent, with only a negligible upward revision versus prior assumptions.
• Net Profit Margin: Stable at roughly 22.07 percent, with a minimal downward tweak that does not materially alter the profitability outlook.
• Future P/E: Edged down slightly to around 45.3x from about 45.4x, suggesting a marginally lower valuation multiple applied to forward earnings.