FRVIA: Higher Margin Sales And Portfolio Review Will Drive Re Rating

Analysts have modestly raised their price target on Forvia to EUR 14.20 from EUR 13.35, reflecting increased confidence in the company's strategy and the growth of its higher margin sales areas.

Analyst Commentary

Bullish analysts highlight that the revised price target reflects growing conviction in Forvia's ability to execute on its strategic roadmap and deliver profitable growth. The upward adjustment underscores confidence that the company can sustain momentum in its higher margin activities while managing operational complexity.

Bullish analysts note that recent site visits and operational updates support a more constructive view on Forvia's earnings trajectory and cash generation profile. They point to improving visibility on cost efficiencies and portfolio optimization as key drivers of potential upside to current market expectations.

Bullish Takeaways

• Raising the price target to EUR 14.20 signals stronger conviction that Forvia's new strategy can drive higher medium term earnings and justify a re rating of the shares.
• Growth in higher margin sales areas is seen as a structural positive, enhancing the company’s profit mix and supporting a more attractive valuation multiple.
• Operational insights from recent site visits give bullish analysts greater confidence in execution, reducing perceived risk around strategy delivery and integration.
• Improved visibility on cash generation and margin expansion is viewed as a catalyst for narrowing the gap between Forvia’s current share price and the raised target.

What's in the News

• Forvia has confirmed it has started a divestment process for parts of its portfolio, including its interiors business group, as part of a comprehensive strategic review aimed at narrowing its portfolio and reducing debt (Key Developments).
• The company reiterated that, as a publicly listed group, it cannot comment on market rumours or disclose details of any potential confidential offers, including valuations or pricing for assets involved in the divestment process (Key Developments).
• Forvia confirmed its earnings guidance for full year 2025, expecting sales between EUR 26.3 billion and EUR 27.5 billion at constant exchange rates (Key Developments).

Valuation Changes

• Fair Value Estimate has risen modestly, increasing from €27.64 to €29.80 per share.
• Discount Rate has edged higher, moving from 12.02 percent to 12.30 percent, implying a slightly higher required return.
• Revenue Growth assumption has been reduced significantly, from about 3.11 percent to around 2.12 percent.
• Net Profit Margin expectation has improved, rising from roughly 3.09 percent to about 3.71 percent.
• Future P/E multiple has been lowered slightly, from 8.41x to approximately 7.74x, indicating a more conservative earnings valuation.