Last Update 03 Dec 25

HUSQ B Ongoing Restructuring And AI Mowers Will Support Future Margin Recovery

Narrative Update on Husqvarna

Analysts have trimmed their Husqvarna price target by SEK 5 to SEK 50, reflecting Q3 results that highlight innovation led growth but also ongoing structural challenges and limited upside until a clearer recovery and growth plan is presented.

Analyst Commentary

Recent commentary highlights a mixed outlook for Husqvarna, with analysts recognizing progress on innovation while questioning the timing and visibility of a sustained recovery in earnings and returns.

Bullish Takeaways

Bullish analysts point to Q3 as evidence that Husqvarna can still deliver innovation led growth in core categories, supporting a floor under medium term revenue expectations.
Product differentiation and brand strength are seen as key assets that, if better leveraged, could justify multiple expansion once clearer execution on strategy and cost structure emerges.
Ongoing investments in new technologies and solutions are viewed as positioning the company to capture future demand as markets normalize, supporting a gradual improvement in growth and margins.

Bearish Takeaways

Bearish analysts emphasize that structural challenges in the portfolio and cost base are weighing on profitability, limiting near term upside to earnings and valuation.
The lack of a detailed, credible recovery and growth plan is seen as a key overhang, reducing visibility on when returns can sustainably improve and making it harder to re rate the shares.
With the price target cut to SEK 50 and a neutral stance maintained, some see current valuation as fairly reflecting execution risk and the time needed for restructuring benefits to materialize.
Uncertainty around the pace of demand recovery in key end markets adds to caution, as slower top line momentum would further constrain operating leverage and free cash flow generation.

What's in the News

Husqvarna will decommission its Brastad factory by the first half of 2027, and will outsource production to third parties to create a more asset light and flexible business model. The company expects annual savings of about SEK 100 million from 2027 and decommissioning costs of roughly SEK 140 million spread across 2025 to 2026. This will affect 84 employees. (Key Developments)
The Group has launched seven new AI enabled robotic lawnmowers with camera based night time operation and wire free installation. This expands its portfolio of intelligent, low carbon solutions for residential and professional customers, including models covering gardens from 400 m2 to 7,500 m2. (Key Developments)
For professional users, Husqvarna introduced the Automower 540 EPOS for facilities up to 8,000 m2. It will be compatible with a new AI Vision accessory from 2026, which will also be available for three earlier EPOS models. (Key Developments)
Husqvarna held an Analyst and Investor Day, providing the market with updated insight into strategy, innovation priorities, and financial targets. (Key Developments)

Valuation Changes

Fair Value: Unchanged at SEK 52.08, indicating no revision to the intrinsic value estimate despite recent developments.
Discount Rate: Risen slightly from 7.50 percent to 7.51 percent, reflecting a marginally higher required return for equity holders.
Revenue Growth: Effectively unchanged at around 2.43 percent, signaling stable expectations for top line expansion.
Net Profit Margin: Stable at approximately 6.50 percent, with no material change in long term profitability assumptions.
Future P/E: Edged up marginally from 11.09x to 11.10x, suggesting a very small increase in the implied valuation multiple on forward earnings.

Leadership in robotics and sustainable equipment, supported by innovation, is driving rapid market share gains and recurring revenue opportunities in both professional and consumer segments.
Portfolio optimization and focus on high-growth, high-margin categories are improving capital efficiency and underpinning sustained earnings growth.
Increased competition and weak market conditions are putting pressure on margins, sales growth, and profitability, especially in robotics and North American markets.

Catalysts

About Husqvarna

Produces and sells outdoor power products, watering products, and lawn care power equipment.What are the underlying business or industry changes driving this perspective?

The accelerating transition towards battery-powered, electric, and especially robotic outdoor equipment is expanding Husqvarna's addressable market and supporting double-digit sales growth in robotics and electrified categories, which is expected to drive above-average revenue growth and higher net margins as a greater share of sales comes from higher-ASP, lower-servicing products.
Growing environmental consciousness and tightening emissions regulations are pushing professional and municipal customers to adopt sustainable solutions-an area where Husqvarna continues to lead through innovation, resulting in rapid market share gains in pro robotic mowers and watering products, likely translating into recurring revenue and improved earnings quality.
Ongoing urban development and the increasing need for professional landscaping are broadening the commercial side of Husqvarna's business (proportion of professional revenue now at 35%), positioning the company to benefit from urban/municipality infrastructure investments and bolstering long-term revenue visibility.
The company's emphasis on robotics and 'smart' connected solutions-including expansion into new use cases (e.g., golf, sports arenas, public spaces, and IoT watering systems)-supports new recurring after-sales income opportunities and fosters long-term customer loyalty, enhancing both revenue growth potential and net margins.
Active portfolio optimization (focusing on higher-growth, margin-accretive categories and reducing inventory/net debt) is increasing capital efficiency and improving return on invested capital (ROIC), setting up Husqvarna for stronger long-term earnings growth.

Husqvarna Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Husqvarna's revenue will grow by 2.9% annually over the next 3 years.
Analysts assume that profit margins will increase from 2.7% today to 6.8% in 3 years time.
Analysts expect earnings to reach SEK 3.6 billion (and earnings per share of SEK 5.17) by about September 2028, up from SEK 1.3 billion today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 12.0x on those 2028 earnings, down from 23.5x today. This future PE is lower than the current PE for the GB Machinery industry at 22.4x.
Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
To value all of this in today's terms, we will use a discount rate of 7.08%, as per the Simply Wall St company report.

Husqvarna Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Intensifying competition from low-cost Asian manufacturers, especially in the entry and mid-range robotics segments, is contributing to aggressive price pressure, resulting in price reductions and negative price impacts (e.g., SEK 160 million negative in Q2 from robotics pricing), which can erode net margins and profitability over time.
Persistent weak market conditions in North America across all divisions, driven by macroeconomic uncertainty and lower consumer demand, have led to declining sales in the region and heightened revenue volatility, particularly as North America remains a significant end market for Husqvarna.
Increasing global tariffs and currency headwinds (SEK 225 million negative in the first half of 2025 from currency and tariffs combined) create ongoing upward cost pressure and could require further price hikes or margin sacrifices, impacting earnings and possibly constraining future growth investments.
Growing market share of robotics products notwithstanding, Husqvarna's organic sales growth sometimes lags overall market growth in mid
and entry-level robotic mower segments, possibly leading to gradual market share erosion and slower revenue momentum if not addressed.
Sustained margin pressure in the entry-level segment due to low profitability and the need to maintain innovation investments to keep up with technological shifts (e.g., vision/LiDAR navigation) increases the risk of negative returns on R&D outlays in this segment, affecting long-term earnings quality.

Valuation

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

The analysts have a consensus price target of SEK61.5 for Husqvarna based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of SEK67.0, and the most bearish reporting a price target of just SEK55.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be SEK52.5 billion, earnings will come to SEK3.6 billion, and it would be trading on a PE ratio of 12.0x, assuming you use a discount rate of 7.1%.
Given the current share price of SEK52.52, the analyst price target of SEK61.5 is 14.6% 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.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

HUSQ B: Execution And Cost Savings Will Drive Share Performance Through 2027