METSO: Rising Order Pipeline And Execution Will Shape A Balanced Medium Term Outlook

The analyst price target for Metso Oyj has been increased modestly to EUR 13.86 from EUR 13.85, as analysts point to a series of recent target hikes and upgrades across the Street, citing inflecting momentum in both of the company’s core businesses and solid execution.

Analyst Commentary

Recent Street research reflects a generally constructive stance on Metso Oyj, with several bullish analysts lifting price targets and upgrading ratings as they gain confidence in the company’s execution and earnings trajectory.

Bullish analysts emphasize that both of Metso’s core businesses are inflecting higher, supporting a re-rating of the shares and justifying higher target prices in the mid-teens euro range. At the same time, more cautious voices maintain underweight or neutral stances, highlighting valuation constraints and residual execution risks despite the company’s recent outperformance.

Bullish Takeaways

Multiple target price increases into the EUR 13.40 to EUR 15.50 range signal growing conviction that Metso’s earnings power and growth profile are underappreciated at current levels.
Upgrades to Buy ratings reflect confidence that both core business segments are inflecting higher, improving the quality and visibility of future cash flows.
Strong Q3 delivery, with beats across key financial items and improved Mining adjusted EBITDA margin, supports the view that management is executing well on operational efficiency and margin expansion.
CEO commentary on the near term outlook for large OE orders is seen as a bold indication that the order pipeline can sustain top line growth and underpin higher valuation multiples.

Bearish Takeaways

Some bearish analysts retain underweight stances even while lifting price targets, suggesting that the recent share price rally already discounts much of the near term improvement.
Neutral ratings paired with higher targets indicate lingering caution on upside potential, with analysts preferring to see a longer track record of consistent execution before turning fully positive.
Despite margin improvement, there is concern that sustaining elevated profitability through the cycle may prove challenging, which could cap further multiple expansion.
Higher targets from firms such as JPMorgan reinforce the upside case, but also implicitly raise the bar for future performance, heightening the risk of disappointment if large orders or margins fall short of expectations.

What's in the News

Metso Corporation set new long term financial targets, expecting annual sales growth (CAGR) of at least 7% to be achieved by the end of 2028 (company guidance).

Valuation Changes

Fair Value Estimate has risen slightly to approximately €13.86 from about €13.85, reflecting a marginal uplift in the intrinsic value assessment.
Discount Rate has increased slightly to around 7.35% from roughly 7.32%, implying a modestly higher required return and risk premium.
Revenue Growth Assumption has risen slightly to about 7.85% from roughly 7.74%, indicating a small upgrade to the medium term top line outlook.
Net Profit Margin has edged down marginally to approximately 11.86% from about 11.87%, suggesting a largely stable but slightly more conservative profitability profile.
Future P/E Multiple has decreased very slightly to about 19.34x from roughly 19.35x, pointing to a near unchanged valuation multiple applied to forward earnings.

Strategic acquisitions and focus on sustainable technologies strengthen positioning for premium pricing and support alignment with global decarbonization and regulatory trends.
Higher-margin service and aftermarket growth, coupled with operational improvements and digital solutions, underpin margin expansion and long-term revenue potential.
Weak sales mix, rising costs, inventory inefficiencies, and regional dependence are straining margins, cash flow, and increasing financial risks amid uncertain growth prospects.

Catalysts

About Metso Oyj

Provides technologies, end-to-end solutions, and services for the aggregates, minerals processing, and metals refining industries in Europe, North and Central America, South America, the Asia Pacific, Greater China, Africa, the Middle East, and India.What are the underlying business or industry changes driving this perspective?

Uptake of new equipment orders, particularly in Europe and North America, signals confidence among customers in infrastructure and urbanization-driven end markets-suggesting revenue growth potential as backlogs are converted to sales in coming quarters.
Successful rollout of the new ERP system (covering 80% of operations by year-end) is expected to enhance operational efficiency, inventory management, and margin performance-supporting improved earnings and cash flow as temporary costs roll off.
Strong and rising order intake in Minerals services (+€160 million in H1), combined with normalization of higher-margin aftermarket mix in H2, indicates faster growth and margin expansion for recurring service revenues versus capital equipment-positively impacting net margins and earnings quality.
Strategic acquisitions (e.g., Swiss Tower Mills for energy efficient grinding, screening technologies in China, recycling tech in Finland) strengthen Metso's portfolio in sustainable and eco-efficient processing technologies, aligning with stricter environmental regulations and the global decarbonization agenda-positioning the company to capture premium pricing and grow top-line revenues.
Large project pipeline in battery metals (copper, gold, lithium) and expectation of order conversion in H2 and 2026, combined with robust demand for digital and automation solutions, leverages global trends toward electrification and digital transformation in mining, underpinning future order intake and long-term revenue growth.

Metso Oyj Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Metso Oyj's revenue will grow by 6.9% annually over the next 3 years.
Analysts assume that profit margins will increase from 9.3% today to 11.7% in 3 years time.
Analysts expect earnings to reach €687.9 million (and earnings per share of €0.83) by about September 2028, up from €446.0 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as €615 million.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 17.8x on those 2028 earnings, down from 20.8x today. This future PE is lower than the current PE for the FI Machinery industry at 20.1x.
Analysts expect the number of shares outstanding to grow by 0.05% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 7.09%, as per the Simply Wall St company report.

Metso Oyj Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Declining services sales and an unfavorable sales mix in both the Aggregates and Minerals segments have negatively impacted margins and profitability; if this trend persists due to increased reliance on lower-margin products or weak equipment utilization, it could put sustained pressure on revenues and net margins.
Ongoing temporary and higher-than-expected costs related to the ERP implementation and future rollouts may continue to burden operating earnings and inflate SG&A expenses, delaying any margin recovery and impacting net income.
Elevated inventory-to-sales ratios (currently at 38% versus historical averages closer to 28%) and headwinds in working capital management signal inefficient capital use; this can tie up cash flows and increase the risk of write-downs, negatively affecting free cash flow and earnings quality.
Rising net debt (up €240 million year-on-year) and an increased reliance on external funding, if coupled with only flat or minimal revenue growth, may heighten financial risk and increase net financial expenses, weighing on future profits.
The company highlights dependence on the North American and European aggregates markets, so any demand shocks, geopolitical trade barriers, or delayed infrastructure cycles-especially tariff-related disruptions or slowing equipment utilization-could result in revenue stagnation or contraction and continued margin compression.

Valuation

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

The analysts have a consensus price target of €12.0 for Metso Oyj 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 €14.0, and the most bearish reporting a price target of just €9.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €5.9 billion, earnings will come to €687.9 million, and it would be trading on a PE ratio of 17.8x, assuming you use a discount rate of 7.1%.
Given the current share price of €11.21, the analyst price target of €12.0 is 6.6% higher. 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.

Analyst Views Mixed as Metso Oyj Boosts Financial Targets and Margins