Offshore Wind Backlog And Vessel Utilization Will Drive Earnings Stability Despite Near-Term Industry Headwinds

Catalysts

About Cadeler

Cadeler provides offshore wind installation and maintenance services through a diversified, modern fleet of wind turbine and foundation installation vessels.

What are the underlying business or industry changes driving this perspective?

• Although global offshore wind buildout is expected to accelerate again from 2029 and into the next decade, the company faces a softer 2027 to 2028 window where project delays and auction slippage could leave vessels underutilized and weigh on revenue growth and fleet level EBITDA.
• Despite a record EUR 2.9 billion backlog with a high share already at final investment decision, the concentration of new contracts in the outer years increases dependence on a narrow set of large projects, so any execution setbacks or scope reductions could materially pressure earnings visibility and reported order book value.
• While the expansion into foundations and O&M aligns with the industry shift toward larger turbines and more complex life cycle services, the heavy upfront CapEx, mission equipment spend and higher operational complexity create ongoing risks to net margins if utilization or pricing falls short of plan.
• Although tightening vessel supply for next generation turbines and foundations toward the end of the decade should support day rates, an increasing number of competitors and more aggressive contract bidding in mid decade transition years could cap pricing power and compress operating margins.
• While geographic diversification across Europe, the U.S. and Asia positions the fleet to capture regional growth in offshore wind, regulatory delays, local content rules and differing OpEx profiles, particularly in the U.S., may drive cost volatility and limit the conversion of topline growth into stable earnings and cash flow.

Assumptions

This narrative explores a more pessimistic perspective on Cadeler compared to the consensus, based on a Fair Value that aligns with the bearish cohort of analysts. How have these above catalysts been quantified?

• The bearish analysts are assuming Cadeler's revenue will grow by 29.4% annually over the next 3 years.
• The bearish analysts assume that profit margins will shrink from 50.0% today to 31.5% in 3 years time.
• The bearish analysts expect earnings to reach €367.1 million (and earnings per share of €1.05) by about December 2028, up from €269.6 million today. However, there is some disagreement amongst the analysts with the more bullish ones expecting earnings as high as €579.9 million.
• In order for the above numbers to justify the price target of the more bearish analyst cohort, the company would need to trade at a PE ratio of 5.1x on those 2028 earnings, which is the same as it is today today. This future PE is lower than the current PE for the NO Construction industry at 14.9x.
• The bearish analysts expect the number of shares outstanding to grow by 0.99% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 10.35%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• The record EUR 2.9 billion backlog, with more than EUR 700 million scheduled over the next 12 months and 78% already at final investment decision, could convert into higher and more stable cash flows than the market currently discounts, supporting a structurally higher earnings base and a sustained upward re-rating of earnings multiples.
• Persistent high utilization in the near term, illustrated by the 92.2% fleet utilization in Q3 2025 alongside a growing and more versatile vessel fleet, may prove that Cadeler can smooth out the softer 2027 to 2028 window better than expected. This could drive stronger revenue resilience and less margin compression than implied in a flat share price scenario.
• The long-term industry outlook, with developers already securing capacity for 2029 to 2031 and management expecting vessel undersupply for foundations and WTG installation toward the end of the decade, could lead to structurally higher day rates and project pricing. This may expand net margins and accelerate earnings growth beyond current expectations.
• The successful diversification into foundations and O&M, supported by large full scope T&I contracts and the build out of the Nexra O&M platform, may create a higher quality, more recurring revenue mix and improved earnings visibility. This could prompt the market to assign Cadeler a higher valuation multiple than is consistent with an unchanged share price.

Valuation

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

• The assumed bearish price target for Cadeler is NOK45.07, which represents up to two standard deviations below the consensus price target of NOK66.74. This valuation is based on what can be assumed as the expectations of Cadeler's future earnings growth, profit margins and other risk factors from analysts on the more bearish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of NOK80.55, and the most bearish reporting a price target of just NOK45.07.
  
• In order for you to agree with the more bearish analyst cohort, you'd need to believe that by 2028, revenues will be €1.2 billion, earnings will come to €367.1 million, and it would be trading on a PE ratio of 5.1x, assuming you use a discount rate of 10.4%.
  
• Given the current share price of NOK46.32, the analyst price target of NOK45.07 is 2.8% lower. 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.