SK: Stable Earnings Profile Will Support Future Share Momentum

Analysts have modestly reduced their price target on SEB, trimming it by SEK 13 to SEK 167, citing slightly lower long term return assumptions. These are reflected in a marginally reduced discount rate and future P/E multiple.

Analyst Commentary

Bullish Takeaways

• Bullish analysts note that even after the reduced target, the valuation continues to price in a stable earnings profile and disciplined capital allocation.
• The modest trim in the target price suggests expectations for long term growth and profitability remain intact, rather than signaling a structural downgrade.
• Some see scope for upside if SEB can execute on cost efficiencies and maintain asset quality, which could support a higher justified P/E over time.
• The updated discount rate and multiple are viewed as a refinement to reflect the current rate and risk environment, not a loss of confidence in the business model.

Bearish Takeaways

• Bearish analysts highlight that the Underweight stance and lower target imply limited upside at current levels, with risk reward seen as unfavorable in the near term.
• The reduced price target reflects concerns that earnings growth may underperform peers if revenue momentum slows or credit costs normalize higher.
• There is caution that the sector’s valuation could de rate further if macro conditions weaken, which would pressure both return assumptions and the acceptable P/E range.
• Some remain wary that incremental capital or regulatory requirements could constrain shareholder returns, justifying a more conservative valuation framework.

What's in the News

• Groupe SEB issued new sales guidance for the third quarter of 2025, expecting a slight organic decline and results below its previous forecasts (company guidance).
• The company lowered its full year 2025 earnings guidance, now targeting stable to slightly positive organic sales growth compared with the prior range of plus 2 percent to plus 4 percent (company guidance).
• Operating Result from Activity for 2025 is now projected between €550 million and €600 million, down from the earlier range of €700 million to €750 million (company guidance).

Valuation Changes

• Fair Value: unchanged at SEK 76.7 per share, indicating no revision to the intrinsic value estimate despite other model tweaks.
• Discount Rate: fallen slightly from 11.53 percent to 11.43 percent, reflecting a modestly lower perceived risk profile or funding cost.
• Revenue Growth: effectively unchanged at around 2.89 percent, suggesting stable expectations for top line expansion.
• Net Profit Margin: unchanged at 4.84 percent, implying no alteration to long term profitability assumptions.
• Future P/E: edged down slightly from 13.41x to 13.37x, pointing to a modestly more conservative valuation multiple applied to future earnings.