Global Electric Adoption Will Expand Connected Vehicle Ecosystems

Key Takeaways

• Integration of core business units and innovative product offerings will drive sustained margin expansion, revenue growth, and greater earnings resilience versus competitors.
  
• Strong demand from advanced mobility trends and global OEM contracts, especially in Asia and India, positions the company for outsized market share and profit gains.
  
• Heavy reliance on legacy products, insufficient innovation, and high customer concentration expose OPmobility to risks from EV transition, regulatory pressures, and intensifying industry competition.

Catalysts

Designs and produces intelligent exterior systems, customized complex modules, lighting systems, energy storage systems, and electrification solutions for all mobility players in Europe, North America, China, rest of Asia, South America, the Middle East, and Africa.

• Analyst consensus recognizes the benefits of the Exterior and Lighting business group consolidation for margin improvement, but this integration is likely to generate even greater-than-expected operating leverage as OPmobility's One4you full exterior module offering positions it to capture a disproportionate share of high-value, integrated system contracts with global OEMs, which should accelerate both revenue growth and sustainable double-digit margin expansion over the next several years.
  
• While analysts broadly expect cost control to enhance net margins, the ongoing SG&A and CapEx discipline is likely to drive structural margin expansion well below 4% SG&A-to-revenue in the mid-term, combined with continued global footprint optimization that will unlock further cash generation and support a sustained higher trajectory for earnings and free cash flow.
  
• OPmobility is set to capitalize profoundly on the surge in advanced mobility demand and vehicle content growth as automakers race to integrate new safety, connectivity, and electrification features-areas where OPmobility's technology leadership and system integration expertise will command premium pricing, expand wallet share per vehicle, and generate above-market revenue and earnings growth.
  
• The outsized uptrend in order intakes from Chinese and new energy vehicle OEMs will translate into step change topline acceleration, as OPmobility's adaptive portfolio and newly secured ten-year and multi-region contracts facilitate rapid market share gains-particularly in Asia and India-driving a major boost to future sales and margin resilience.
  
• OPmobility's scale, balanced global footprint, and first-mover success in smart manufacturing and sustainable design will enable the company to be an outsized winner from the industry's accelerating supplier consolidation, enhancing its competitive moat, improving pricing power, and supporting structurally higher EBITDA and net results long-term.

OPmobility Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on OPmobility compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming OPmobility's revenue will grow by 2.8% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 1.5% today to 3.5% in 3 years time.
• The bullish analysts expect earnings to reach €394.9 million (and earnings per share of €2.23) by about August 2028, up from €160.0 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 7.7x on those 2028 earnings, down from 11.3x today. This future PE is lower than the current PE for the GB Auto Components industry at 11.3x.
• Analysts expect the number of shares outstanding to decline by 0.75% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 10.11%, as per the Simply Wall St company report.

OPmobility Future Earnings Per Share Growth

Risks

• OPmobility's significant exposure to legacy combustion engine products, such as fuel tank systems, leaves its revenues and long-term growth at risk as the secular shift to electric vehicles accelerates and shrinks the addressable market for traditional powertrain components.
  
• Intensifying government sustainability demands and stricter emission standards will likely force higher compliance and CapEx spending, which could weigh on the company's net margins even as management strives for cost control.
  
• Customer concentration with a handful of major OEMs, such as Stellantis and Mercedes-Benz, poses a risk to revenue and earnings stability, especially if these partners shift to other suppliers or new EV-focused technologies where OPmobility may not be as strong.
  
• Margin improvements have recently been achieved mainly through aggressive cost management and reduced CapEx, but continued underinvestment in innovation and R&D could undermine competitiveness in high-growth areas like EV platforms and advanced driver assistance systems, putting future revenues and market share at risk.
  
• Rapid industry consolidation, increased OEM bargaining power, and growing competition from tech-focused entrants threaten OPmobility's pricing power and contract renewals, potentially resulting in greater pressure on net margins and long-term earnings growth.

Valuation

• The assumed bullish price target for OPmobility is €16.3, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of OPmobility's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €16.3, and the most bearish reporting a price target of just €7.4.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be €11.3 billion, earnings will come to €394.9 million, and it would be trading on a PE ratio of 7.7x, assuming you use a discount rate of 10.1%.
  
• Given the current share price of €12.68, the bullish analyst price target of €16.3 is 22.2% higher.
  
• 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.