HEM: Margin Expansion And Buybacks Will Support Medium Term Cash Flow Stability

Hemnet Group's updated narrative fair value has been revised lower to approximately SEK 282 from SEK 294, as analysts trim price targets across the sector, citing slightly softer revenue growth expectations despite improving profit margins and a modestly lower forward P E multiple.

Analyst Commentary

Recent Street revisions for Hemnet Group have been characterized by a series of lower price targets, signaling a more cautious stance on near term upside even as the company continues to execute on profitability improvements.

Bullish Takeaways

• Bullish analysts acknowledge that, despite reduced price targets, Hemnet still commands a premium valuation in the sector, reflecting confidence in its dominant market position and scalable digital platform.
• The maintenance of Neutral and Equal Weight style ratings alongside target cuts indicates that, while upside is seen as more limited, downside is also viewed as relatively contained given strong margins and cash generation.
• Some forecasts imply that modest revenue growth can still support attractive long term returns if Hemnet sustains margin expansion and disciplined cost control.
• Updated targets continue to sit comfortably above current trading levels, suggesting that analysts still see execution on growth initiatives and pricing as capable of driving gradual re rating over time.

Bearish Takeaways

• Bearish analysts are trimming valuation multiples to reflect softer top line expectations and a more challenging macro backdrop for housing transactions, which could cap near term growth.
• The sequence of target reductions from houses such as JPMorgan underscores concern that consensus may have been too optimistic on volume recovery and upsell momentum.
• Lower forward price targets highlight the risk that even small delivery misses on growth or user metrics could pressure a still elevated earnings multiple.
• There is increasing focus on execution risk around new products and pricing initiatives, with analysts cautious that competitive responses or weaker demand could slow the path to re acceleration in revenue.

What's in the News

• Completed share buyback program with a total of 812,500 shares repurchased, equivalent to 0.85% of shares outstanding, under the mandate announced on May 6, 2025 (company disclosure).
• Repurchased 560,000 shares between July 1 and September 30, 2025, representing 0.59% of share capital, for a total consideration of SEK 148.6 million (company disclosure).
• Aggregate capital deployed on the current buyback reached SEK 223.2 million, which signals continued commitment to shareholder returns amid a softer growth outlook (company disclosure).
• The reduced free float and share count from the completed buyback are expected to provide a modest lift to earnings per share and to support valuation resilience (analysis of company disclosure).

Valuation Changes

• Fair value narrative estimate reduced from approximately SEK 294.4 to SEK 281.8, a modest downward revision of around 4 percent.
• Discount rate adjusted marginally lower from about 6.32 percent to 6.31 percent, implying a slightly less conservative risk assumption.
• Revenue growth trimmed from roughly 18.42 percent to 17.73 percent, indicating a small moderation in top line expectations.
• Net profit margin raised slightly from around 42.49 percent to 43.04 percent, reflecting an improved profitability outlook.
• Future P/E reduced from about 29.58x to 28.44x, signaling a modest compression in the forward valuation multiple.