SFL: Future Execution And Margin Delivery Will Shape Post Rally Risk Balance

Analysts raised their price target for Safilo Group to EUR 2.07 from EUR 1.62, citing an improved risk reward profile and supportive recent rating actions, despite a modestly higher discount rate and largely unchanged growth and profitability assumptions.

Analyst Commentary

Recent research updates present a mixed but constructive view on Safilo Group, reflecting both the sharp share price recovery and evolving expectations for future execution.

Bullish Takeaways

• Bullish analysts highlight the upward revision in price targets, arguing that improved fundamentals and rating support justify a higher equity valuation despite the recent rally.
• The increased target levels are seen as evidence that growth and profitability assumptions remain intact, suggesting confidence in management’s ability to deliver on current forecasts.
• Some see the risk reward profile as still attractive, with upside potential if operational execution and cost discipline translate into margin expansion above current market expectations.
• Higher target prices are also interpreted as a signal that potential cash flow generation and balance sheet resilience are being underappreciated by the broader market.

Bearish Takeaways

• Bearish analysts note that the shares have roughly doubled since the summer, arguing that the current valuation already discounts a significant portion of the medium term recovery story.
• There is concern that, even with rising target prices, upside is now more limited, as expectations for growth and profitability leave less room for execution missteps.
• Some view the risk reward as more balanced, cautioning that any slowdown in top line momentum or delays in strategic initiatives could trigger a derating from current levels.
• Analysts also flag that a modestly higher discount rate and macro uncertainties could cap multiple expansion, particularly if visibility on sustainable earnings growth does not improve.

Valuation Changes

• Fair Value Estimate remained unchanged at approximately €1.91 per share, indicating no revision to the intrinsic value assessment.
• Discount Rate rose slightly from about 12.19 percent to 12.22 percent, reflecting a marginally higher perceived risk profile.
• Revenue Growth was effectively unchanged at around 1.9 percent, suggesting stable expectations for top line expansion.
• Net Profit Margin was broadly unchanged at roughly 5.0 percent, indicating consistent assumptions on profitability.
• Future P/E increased only marginally from about 21.19x to 21.21x, implying a nearly stable valuation multiple on forward earnings.