FLS: Capital Markets Day Will Unlock Upside Despite CEO Transition And Guidance Update

The analyst fair value estimate for FLSmidth has edged down by DKK 4 to DKK 470.88, as analysts balance a slightly higher discount rate against a reaffirmed positive long term outlook, supported by recent upward revisions to several Street price targets despite mixed ratings.

Analyst Commentary

Recent Street research reflects a generally constructive view on FLSmidth, with several firms lifting price targets and one notable downgrade tempering the consensus. Overall, the pattern points to confidence in medium term growth and capital allocation, offset by concerns about near term execution and valuation after a strong share price run.

Bullish Takeaways

• Bullish analysts have raised price targets into the DKK 540 to DKK 580 range, indicating upside potential versus the current fair value estimate as they factor in stronger long term earnings power.
• Several upgrades to Buy highlight improving conviction in FLSmidth's growth profile, particularly around its ability to convert its order backlog and capitalize on structural demand in mining and cement technologies.
• The upcoming capital markets day is viewed as a near term catalyst, with expectations that management will provide clearer medium term margin and cash flow targets that could support a re rating.
• Positive target revisions suggest confidence that recent operational missteps, including a weaker Q3, are temporary and that management can deliver on cost efficiency and project execution improvements.

Bearish Takeaways

• Bearish analysts have moved to more neutral stances with Hold ratings, citing a risk that recent share price strength already discounts much of the anticipated margin expansion and growth recovery.
• Concerns persist around the company’s ability to consistently meet quarterly expectations, with recent estimate misses reinforcing execution risk in complex project businesses.
• Some targets remain materially below the most optimistic levels, signaling skepticism that FLSmidth can fully achieve or sustain the higher profitability and growth embedded in the upper end of Street forecasts.
• There is caution that any disappointment at the capital markets day, particularly on long term margin guidance or capital allocation, could trigger multiple compression from current valuation levels.

What's in the News

• CEO Mikko Keto has informed the Board of his intention to step down to join a non competing company, with a structured succession process underway and his departure expected in the first half of 2026, following a tenure marked by portfolio rationalisation and operational streamlining (Key Developments).
• FLSmidth updated its 2025 earnings guidance, now expecting revenue of around DKK 14.5 billion, narrowing and effectively lowering the previous range of DKK 14.5 billion to DKK 15.0 billion (Key Developments).
• The company secured a major order from a long standing Indian mining and steel customer to supply core technologies for what is set to be one of the world’s largest and most sustainable iron ore beneficiation plants, including the world’s largest filtered tailings system and high rate thickeners, with delivery expected in 2026 (Key Developments).

Valuation Changes

• Fair Value edged down slightly from DKK 474.88 to DKK 470.88, reflecting a modest tightening in the valuation range.
• The Discount Rate has risen slightly from 6.48 percent to 6.52 percent, implying a marginally higher required return and modest pressure on the valuation.
• Revenue Growth is effectively unchanged at around minus 5.33 percent, indicating no material shift in top line expectations.
• The Net Profit Margin is effectively stable at about 10.68 percent, with changes too small to alter the earnings quality view.
• Future P/E eased slightly from 17.11x to 16.98x, suggesting a marginally lower multiple applied to forward earnings.