AFRY: Backlog And Restructuring Will Drive Future Earnings Visibility And Upside

Analysts have modestly reduced their Afry price target to SEK 210 from SEK 240, citing a slower recovery and more gradual margin improvement. They emphasize that a solid backlog, ongoing restructuring, and strategic project wins support the longer term earnings outlook.

Analyst Commentary

Bullish analysts highlight that the reduced price target still implies meaningful upside, arguing that current valuation does not fully reflect the quality of Afry's backlog or its potential for margin expansion as restructuring measures take hold.

Bullish Takeaways

• Bullish analysts view the target cut as a timing adjustment, noting that the core investment thesis around improving earnings quality and structural demand for Afry's services remains intact.
• The growing and diversified backlog is seen as providing strong revenue visibility, supporting confidence in medium term growth and cash flow generation.
• Ongoing restructuring initiatives are expected to drive gradual margin uplift, which bullish analysts believe is not fully priced into current valuation multiples.
• Strategic project wins in higher value segments are interpreted as evidence of strong execution, underpinning expectations for a re rating as profitability improves.

Bearish Takeaways

• Bearish analysts worry that the slower than anticipated recovery increases execution risk, potentially delaying the inflection point for earnings and margin expansion.
• There is concern that the more gradual margin improvement could limit near term operating leverage, justifying a more cautious stance on valuation.
• Some analysts flag the risk that prolonged restructuring may weigh on costs and implementation complexity, which could pressure short term profitability.
• The revised target reflects caution that macro uncertainty and project timing could create volatility in quarterly results, tempering enthusiasm for aggressive multiple expansion.

What's in the News

• Afry issued new long term guidance, targeting net sales of 35 billion SEK for full year 2028, signaling confidence in sustained growth despite a slower near term recovery (Corporate Guidance)
• At its Capital Markets Day 2025, Afry reiterated that selective, strategic bolt on M&A in high performing and high growth segments will remain a key lever to support the group strategy (Capital Markets Day 2025)
• Management emphasized a disciplined, fully integrated M&A approach, focusing on non Nordic expansion across the Americas, the rest of Europe, and Asia Pacific to strengthen Afry's global footprint (Capital Markets Day 2025)

Valuation Changes

• Fair Value Estimate remains unchanged at approximately SEK 204 per share, indicating no revision to the intrinsic value assessment.
• Discount Rate has risen slightly to about 5.95 percent from 5.93 percent, reflecting a marginally higher required return.
• Revenue Growth Assumption is essentially unchanged at around 3.23 percent, signaling a stable outlook for top line expansion.
• Net Profit Margin Assumption is stable at roughly 6.99 percent, with only an immaterial numerical adjustment.
• Future P/E Multiple has risen slightly to about 13.60x from 13.59x, indicating a modestly higher implied valuation multiple on forward earnings.