SKF B: Outlook Will Balance Autos Spin-Off Potential And Sector Volatility

Analysts have slightly increased their fair value estimate for AB SKF from SEK 260.79 to SEK 266.86. This revision reflects stronger profit margins and expectations for improved long-term performance, despite recent variations in price targets among major research firms.

Analyst Commentary

Analyst perspectives on AB SKF remain mixed, as recent changes to price targets and ratings highlight differing views on the company's outlook. These assessments reflect ongoing debates over valuation, execution risks, and future growth trajectories.

Bullish Takeaways

• Bullish analysts are raising price targets and upgrading ratings based on expectations for accelerated sales and profit growth. This is supported by positive momentum in the European short-cycle sector.
• Improvements in the company's profit margins have contributed to greater confidence in longer-term performance and support a positive outlook on earnings potential.
• The planned spin-off of the Autos segment in 2026 is anticipated to reduce ongoing drag on financial results. This could potentially unlock additional shareholder value.
• Recent upgrades highlight AB SKF's strategic positioning as it navigates sector challenges. Forecasts indicate possible resilience in changing market conditions.

Bearish Takeaways

• Bearish analysts are lowering price targets, citing caution amid near-term volatility and questions about the pace at which improved profitability can be sustained.
• Continued downward adjustments to target prices by some firms reflect lingering concerns around execution and the company's ability to consistently deliver on its growth ambitions.
• Analysts maintain a neutral stance in some cases, indicating that anticipated growth may already be reflected in current valuations with limited room for upside.
• Uncertainty remains regarding the full impact and timing of the Autos segment spin-off, which could influence medium-term profitability.

What's in the News

• SKF will showcase scalable clean technologies and circular solutions at COP30, including remanufacturing and RecondOil. Its remanufacturing solutions received SBCOP's Best Cases award for advancing industrial decarbonization (Key Developments).
• SKF has developed ARCTIC15, a new patented steel for aeroengine bearings, which enables higher power density and efficiency for next-generation jet engines aimed at reducing emissions. A public test demonstration is planned for early 2026 (Key Developments).
• The company launched The Patent Bay, an open platform that makes selected sustainability-focused patents freely available to accelerate global innovation and collaboration (Key Developments).
• AB SKF issued financial guidance for Q4 2025, expecting stable market demand with organic sales unchanged year-over-year and a SEK 650 million negative currency impact on operating profit compared to Q4 2024 (Key Developments).
• SKF announced the discontinuation of production at its Tortuguitas plant in Argentina. Operations are being relocated and efforts are underway to support affected employees (Key Developments).

Valuation Changes

• Fair Value Estimate has risen slightly from SEK 260.79 to SEK 266.86. This reflects a modest increase in analysts' long-term valuation of AB SKF.
• Discount Rate increased marginally, moving from 6.61% to 6.64%. This suggests a minor adjustment in perceived risk or cost of capital.
• Revenue Growth Expectations have fallen significantly, declining from 2.19% to just 0.12%. This indicates more cautious forecasts for top-line expansion.
• Net Profit Margin forecast improved from 8.84% to 9.51%. This signals higher expected profitability going forward.
• Future P/E multiple has edged up from 16.16x to 16.36x. This points to a slight change in anticipated earnings valuation.