Automation And Digitalization Will Improve Manufacturing Efficiency And Sustainability

Analysts have raised their fair value estimate for AB SKF slightly, from SEK 253.20 to SEK 255.87. They cite expectations of accelerating sales growth and improving profit trends due to shifting industry dynamics.

Analyst Commentary

Bullish analysts have highlighted several positive trends for AB SKF, driving recent upgrades and price target increases. At the same time, some analysts continue to express caution around certain challenges facing the company.

• Growing confidence in accelerating sales and profit growth, supported by improving short-cycle industrial momentum in Europe.
• Ongoing industry transformation is seen as a catalyst, with the company positioned to benefit from market shifts and operational execution.
• The planned automotive spin-off in 2026 is expected to reduce exposure to underperforming segments and may boost margins and valuation.
• Recent upgrades reflect expectations that SKF can close the performance gap with industry peers as profit trends improve.

• Despite optimism, valuation remains close to neutral for some, with lingering caution on consensus expectations for top-line and earnings execution.
• Drag from the automotive segment continues to be a headwind until the anticipated spin-off is complete, which may result in near-term volatility.
• Strong competition within the sector means SKF must deliver sustained margin improvement to justify upgraded price targets.
• Peers may offer more attractive risk-reward profiles in the eyes of select analysts, which keeps SKF from being a top sector pick for everyone.

What's in the News

• SKF inaugurated its new Super-precision Centre in Airasca, Italy, a highly automated, digitally connected global hub for Super-precision bearings. This center centralizes manufacturing, R&D, business support, and engineering resources to drive innovation for demanding machine tool and precision bearing industries. (Key Developments)
• The Villar Perosa plant in Italy has transitioned its Super-precision bearing production to Airasca and will continue to operate as SKF's center of excellence for railway and aerospace bearing solutions. (Key Developments)
• SKF entered a strategic partnership with Sieb & Meyer to deliver integrated, high-efficiency inverter solutions for air compressors, turbo-blowers, and HVAC. The partnership leverages magnetic bearing technology to cut energy consumption and support sustainability across multiple industries. (Key Developments)
• At the Tech and Innovation Summit, SKF is launching new products designed to reduce downtime, improve reliability, and utilize data-driven technologies, with a focus on R&D in machine tools, railways, and other high-value segments. (Key Developments)
• AB SKF has issued earnings guidance for Q3 2025, anticipating organic sales to remain steady year-over-year. Foreign currency effects are expected to negatively impact operating profit by approximately MSEK 500 compared to Q3 2024. (Key Developments)

Valuation Changes

• The Fair Value Estimate has risen slightly, from SEK 253.20 to SEK 255.87, reflecting modest optimism.
• The Discount Rate has increased marginally, moving from 6.39% to 6.47%, indicating slightly higher perceived risk or cost of capital.
• The Revenue Growth projection has edged down, shifting from 2.00% to 1.94%, signaling softer sales expectations.
• The Net Profit Margin forecast is nearly unchanged, dipping from 9.11% to 9.10%.
• The Future P/E Ratio estimate has ticked up, from 15.02x to 15.25x, suggesting a modestly higher earnings multiple being applied.