Last Update 13 Dec 25

Fair value Increased 12%

SAND: Medium Term Revenue Outlook Will Support Upside From Recent Buy Upgrades

We raise our Sandvik fair value estimate to SEK 335 from SEK 300, reflecting analysts' higher price targets and improved expectations for medium term revenue growth, which are partly offset by slightly lower margin assumptions and a marginally higher discount rate.

Analyst Commentary

Bullish analysts have recently reiterated a constructive stance on Sandvik, highlighting a combination of solid execution, improving end market conditions, and scope for further margin enhancement as key drivers of upside to the current share price.

Several recent target price increases, clustered in a relatively short time frame, underscore growing confidence that Sandvik can deliver on medium term growth ambitions while managing cost inflation and mix headwinds.

Notably, one research house has moved to a more positive fundamental view with an upgrade to Buy, aligning its SEK 335 price target with our updated fair value estimate and signaling conviction that the company can compound earnings at an attractive rate over the cycle.

While there has been at least one downgrade to Hold with a lower target than peers, the broader pattern of rising targets and supportive recommendations suggests that recent operational improvements and portfolio measures are gaining credibility among bullish analysts.

Bullish Takeaways

Clustered price target increases into the low to mid SEK 300s indicate that bullish analysts see meaningful upside from current levels as Sandvik executes on its strategic growth plan.
The upgrade to Buy, coupled with a SEK 335 target, reflects growing confidence in Sandvik's ability to sustain revenue growth through the cycle and improve profitability through mix, pricing, and efficiency initiatives.
Successive target hikes over recent months point to rising earnings expectations, suggesting that prior consensus assumptions for margins and cash generation may have been too conservative.
Despite isolated cautious views, the balance of research commentary remains skewed toward positive recommendations and higher valuation anchors. This reinforces the case some analysts make for a premium multiple relative to historic averages, contingent on continued solid execution.

What's in the News

Sandvik unveiled the eNimon "Nomine car" installation at Sweden's National Museum of Science and Technology, a transparent, non-functioning EV-shaped exhibit designed to highlight society's dependence on mined metals and minerals for electrification and clean energy technologies (Key Developments).
The company emphasized that more than 90% of an average electric car comes from mining-derived resources and warned that current mineral production, including lithium, nickel and cobalt, is far below what is needed to meet global net-zero and electrification targets (Key Developments).
Sandvik positioned sustainable mining as a critical enabler of modern life. The company noted that EVs require six times the mineral inputs of conventional cars and that onshore wind plants need nine times more mineral resources than gas-fired plants, underscoring the risk of material shortages without scaled, responsible mining practices (Key Developments).
Sandvik secured a major SEK 280 million underground mining equipment order from Zimplats for the Ngezi mines complex in Zimbabwe, covering loaders, trucks and drills, with deliveries scheduled from the third quarter of 2025 through the second quarter of 2026 and additional aftermarket value (Key Developments).
The Zimplats order supports the continued expansion of underground capacity at the Ngezi platinum group metals operation, which has shifted from open-pit to underground mining, reinforcing Sandvik's position in large-scale underground mining projects (Key Developments).

Valuation Changes

The fair value estimate has risen moderately, increasing from SEK 300 to SEK 335, reflecting higher assumed earnings power despite some offsetting headwinds.
The discount rate has risen slightly, moving from 6.32% to about 6.59%, implying a marginally higher required return on Sandvik's future cash flows.
Revenue growth has risen significantly, with the medium-term annual growth assumption increasing from about 6.1% to roughly 9.8%.
The net profit margin has fallen slightly, with the medium-term margin assumption reduced from about 15.5% to about 14.8%.
The future P/E has risen slightly, moving from around 20.1x to about 21.6x, indicating a modestly higher valuation multiple applied to forward earnings.

Strong demand, production ramp-up, and technological leadership in electrification and automation position Sandvik for sustained revenue and margin expansion above industry expectations.
Advancements in software, recurring revenue models, and energy-efficient solutions increase customer loyalty and reduce business cyclicality, underpinning long-term structural growth.
Exposure to volatile end-markets, geopolitical risks, and intensifying competition threatens margins and revenues, while restructuring efforts may disrupt operations and earnings during transitions.

Catalysts

About Sandvik

An engineering company, provides products and solutions for mining and rock excavation, metal cutting, and materials technology worldwide.What are the underlying business or industry changes driving this perspective?

While analyst consensus expects continued strong Mining momentum to support revenue, this could be significantly understated: Sandvik is ramping production capacity and hiring at scale due to a record-high backlog and lead times nearing pain points for customers, positioning the company for a multi-year step change in both equipment and aftermarket revenues as it captures pent-up replacement demand and greenfield expansion.
Analysts broadly agree that electrification and automation-ready mining products fuel growth, but the largest-ever battery-electric vehicle order and rapid customer conversion toward BEVs suggest Sandvik could dominate a market inflection as mining companies increasingly standardize on electrified fleets, driving both market share gains and premium pricing that support long-term margin expansion.
Sandvik's leap in software, data-driven optimization, and automation initiatives-with recurring revenues and growing customer stickiness from tools like Vericut Optimizer-are laying the foundation for a high-margin, subscription-based business model, which will meaningfully lift net margins and reduce cyclicality over time.
Global infrastructure build-out and urbanization in key regions are driving a structural demand upcycle for mining, construction, and materials processing equipment; with major upgrades underway in North America and premium local offerings scaling in China, Sandvik is positioned to deliver sustained double-digit organic growth in its addressable market.
Heightened sustainability and decarbonization requirements across mining and manufacturing are sharply accelerating replacement cycles for outdated fleets, and Sandvik's advanced, energy-efficient solutions position the company to capture premium share and drive both revenue and EBIT growth well above consensus expectations.

Sandvik Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

This narrative explores a more optimistic perspective on Sandvik compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
The bullish analysts are assuming Sandvik's revenue will grow by 6.1% annually over the next 3 years.
The bullish analysts assume that profit margins will increase from 11.9% today to 15.5% in 3 years time.
The bullish analysts expect earnings to reach SEK 22.5 billion (and earnings per share of SEK 17.92) by about September 2028, up from SEK 14.5 billion 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 20.1x on those 2028 earnings, down from 21.5x today. This future PE is lower than the current PE for the GB Machinery industry at 23.2x.
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 6.32%, as per the Simply Wall St company report.

Sandvik Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Global decarbonization efforts and reduced mining activity, especially in sectors like coal and traditional mining, could suppress long-term demand for Sandvik's core heavy equipment and services, ultimately weighing on future revenues and order intake.
Sandvik remains highly exposed to cyclical end-markets such as mining and oil & gas, making its revenue susceptible to sharp downturns during commodity cycles and potentially resulting in lower capacity utilization and declining net margins.
Rising geopolitical tensions and localization of supply chains introduce risks of ongoing tariffs, costly trade disputes, and shifting production, which may lead to higher costs and compressed operating margins, as highlighted by recent currency swings and tariff headwinds that diluted profits.
Sandvik faces increasing competition from lower-cost Asian manufacturers in precision components and tools, which could trigger sustained pricing pressure and erode the company's market share, putting downward pressure on both revenues and margins over time.
The company's ongoing restructuring efforts and divestitures, while designed to streamline operations, risk producing one-off costs, loss of scale, and operational disruptions such as ERP implementation issues, which could reduce earnings and profitability during transition periods.

Valuation

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

The assumed bullish price target for Sandvik is SEK300.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Sandvik'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 SEK300.0, and the most bearish reporting a price target of just SEK161.0.
In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be SEK145.0 billion, earnings will come to SEK22.5 billion, and it would be trading on a PE ratio of 20.1x, assuming you use a discount rate of 6.3%.
Given the current share price of SEK248.1, the bullish analyst price target of SEK300.0 is 17.3% 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

AnalystHighTarget 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 AnalystHighTarget 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 AnalystHighTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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