NKT: Margin Upside By 2028 Will Balance Capacity Ramp Execution Risks

Analysts have modestly raised their price target on NKT, with incremental fair value and valuation multiple upgrades reflecting confidence that easing capacity ramp risks will support faster earnings growth and sector leading margins by 2028, as highlighted by recent upward price target revisions to DKK 719 and DKK 878.

Analyst Commentary

Recent research updates underline a constructive but selective stance on NKT, with upward revisions to price targets and ratings reflecting confidence in the company’s medium term growth trajectory while still acknowledging execution and valuation risks.

Bullish Takeaways

• Bullish analysts highlight that NKT is moving past the most significant risks tied to its capacity ramp, improving confidence in delivery against its order backlog.
• Faster expected earnings growth and the potential for sector leading margins by 2028 are seen as key drivers supporting higher valuation multiples over the medium term.
• The sharp increase in one key price target to DKK 878, alongside a rating upgrade, signals growing conviction that the current share price underestimates NKT’s structural growth and margin potential.
• JPMorgan’s decision to raise its price target to DKK 719, even while maintaining a Neutral stance, is viewed as additional validation that underlying fundamentals are improving.

Bearish Takeaways

• Bearish analysts caution that, despite higher targets, some valuation upside may already be priced in, justifying a more neutral stance on the shares.
• There remains residual execution risk around fully realizing planned capacity ramp ups and converting operational improvements into the projected margin expansion.
• The path to achieving sector leading margins by 2028 is seen as ambitious, with little room for cost overruns, project delays or weaker than expected demand.
• Short term earnings can still be volatile during the transition period, which could limit near term share price performance even if the long term story remains intact.

What's in the News

• NKT maintained its 2025 earnings guidance, reiterating revenue expectations of approximately EUR 2.65 billion to EUR 2.75 billion, contingent on satisfactory project execution, stable markets, and an intact supply chain (Corporate Guidance).
• NKT completed a turnkey repair of a 220 kV subsea export cable for the Beatrice Offshore Windfarm in just 38 days, restoring full export capacity months earlier than alternative solutions and showcasing its rapid-response service capabilities (Client Announcement).
• NKT joined the World Economic Forum's First Movers Coalition, committing that at least 10% of its primary aluminium purchases will be low carbon by 2030, supported by a long term low carbon aluminium supply agreement with Hydro running to 2033 (Client Announcement).
• NKT was selected as preferred bidder to supply the 525 kV HVDC cable system for the Eastern Green Link 3 interconnector between Scotland and England, a roughly 680 km route that will form a key part of the UK's clean energy transmission backbone (Client Announcement).

Valuation Changes

• Fair Value: risen slightly from DKK 756.71 to DKK 759.63, implying a modest uplift in intrinsic valuation.
• Discount Rate: increased slightly from 7.03 percent to 7.16 percent, reflecting a marginally higher required return.
• Revenue Growth: effectively unchanged, edging up from 9.60 percent to 9.60 percent in the updated forecast.
• Net Profit Margin: nudged down marginally from 8.10 percent to 8.10 percent, indicating a very small reduction in long term profitability assumptions.
• Future P/E: risen slightly from 17.11x to 17.25x, signalling a modestly higher valuation multiple applied to forward earnings.