Urbanization And Electrification Will Accelerate Robotics Adoption

Key Takeaways

• Early leadership in robotic mowers and smart irrigation technology, combined with expanding dealer networks, positions Husqvarna for rapid growth and increased margins as automation demand surges.
  
• Strategic financial improvements and omni-channel investments enable sustainable earnings growth, higher service revenues, and flexibility for reinvestment or acquisitions.
  
• Weak North American demand, higher tariffs, discount-driven price competition, climate threats, and lagging battery innovation together threaten Husqvarna's margins, revenues, and long-term growth.

Catalysts

Produces and sells outdoor power products, watering products, and lawn care power equipment.

• Analyst consensus sees robotic mower growth as a major driver, but the scale and speed of boundary wire-free adoption, combined with Husqvarna's early-mover advantage and rapidly expanding dealer network (covering 90% of US golf courses), could result in an accelerated shift-potentially doubling robotics' share of group revenues and expanding margins far faster than expected.
  
• While analysts highlight North American professional irrigation as a growth lever, the integration of ETwater and Orbit, along with proprietary smart controllers and AI-driven platforms, positions Husqvarna not just as a market entrant but as a technology leader; this could lead to outsized recurring revenues and rapid margin improvement as automated irrigation and sustainability become regulatory and commercial priorities.
  
• The market currently underappreciates how fast regulatory, demographic, and labor trends will accelerate demand for automation and electrified outdoor equipment-Husqvarna's leadership in battery and robotic technology positions it to dominate as labor shortages and emissions restrictions drive adoption, providing sustained multi-year revenue growth.
  
• Husqvarna's concerted push into omni-channel retail-including expansion pilots with major European retailers-alongside investment in aftermarket and connected services, is likely to drive higher attachment rates and service revenues, reducing cyclicality and structurally lifting gross and net margins over time.
  
• The company's rapid debt reduction, major working capital improvements, and a new streamlining strategy (including simplifying product range and asset divestments) have set up a powerful financial base, supporting possible large-scale reinvestment, accretive acquisitions, or aggressive buybacks, with significant medium-term benefits for earnings growth.

Husqvarna Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Husqvarna compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Husqvarna's revenue will grow by 3.2% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 2.0% today to 6.7% in 3 years time.
• The bullish analysts expect earnings to reach SEK 3.6 billion (and earnings per share of SEK 6.25) by about July 2028, up from SEK 973.0 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 12.9x on those 2028 earnings, down from 30.2x today. This future PE is lower than the current PE for the GB Machinery industry at 24.3x.
• 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 7.26%, as per the Simply Wall St company report.

Husqvarna Future Earnings Per Share Growth

Risks

• Persistent weakness in the North American market across all divisions, driven by cautious retailers, high inventory levels, ongoing macroeconomic uncertainty and soft consumer demand, is weighing on Husqvarna's sales volumes and could lead to further pressure on group revenues and operating income in coming years.
  
• Increased tariffs on product imports, particularly to the United States, are expected to have a negative impact of between SEK 300 million and SEK 500 million on EBIT for the remainder of 2025, and carry over into 2026, with risks that further tariff escalation or supply chain relocation costs could erode net margins and profitability.
  
• Husqvarna's product mix shift toward discounted legacy models, intensified price repositioning in robotics, continued discounting on boundary wire models, and greater competition in both entry-level and higher-end segments could depress pricing power and lead to persistently lower margins.
  
• Climate-related factors such as water scarcity, unfavorable or unpredictable weather patterns, and regulatory changes targeting emissions and sustainability are impacting core divisions such as Gardena and threaten to shrink the addressable market for traditional watering and gardening equipment, putting long-term pressure on group revenues.
  
• Lagging innovation in battery/electric handheld tools, as indicated by only flat performance in battery handheld sales despite market growth, raises concern about Husqvarna's ability to maintain or expand market share in the fast-growing cordless segment, elevating risks to revenue growth and long-term earnings momentum.

Valuation

• The assumed bullish price target for Husqvarna is SEK65.5, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Husqvarna'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 SEK65.5, and the most bearish reporting a price target of just SEK50.0.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be SEK53.1 billion, earnings will come to SEK3.6 billion, and it would be trading on a PE ratio of 12.9x, assuming you use a discount rate of 7.3%.
• Given the current share price of SEK51.34, the bullish analyst price target of SEK65.5 is 21.6% 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.