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SLEEP: Long Term Profit Margins Will Drive Stronger Future Upside Potential

Rising Smartphones And AI Sleep Insights Will Transform Digital Health

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SLEEP
AnalystHighTarget
Not Invested
Published 03 Aug 2025

Update shared on 15 Dec 2025

Fair value Decreased 12%
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AnalystHighTarget's Fair Value
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1Y
-31.4%
7D
5.6%

Analysts have trimmed their price target on Sleep Cycle from approximately $49.00 to $43.00. This reflects expectations for slower revenue growth, partially offset by higher long term profit margins and a lower future price to earnings multiple.

What's in the News

  • Launch of Luma, an AI powered sleep coach that uses long term sleep data to deliver personalized, conversational guidance linking sleep to energy, focus, stress, performance, and long term health (company announcement)
  • Introduction of the Sleep SDK, allowing partners to integrate Sleep Cycle's AI based, contactless sleep tracking and analysis directly into their apps and connected devices under the Powered by Sleep Cycle licensing model (company announcement)
  • New global partnership with Urban Sports Club, offering members exclusive access to Sleep Cycle premium to combine sleep insights with broader fitness and wellbeing goals, aimed at driving subscriber and revenue growth (company announcement)
  • Pilot collaboration with Ultrahuman, licensing Sleep Cycle's Sleep SDK to support multi biomarker self quantification and potentially expand into a broader, long term technology partnership and new revenue streams (company announcement)
  • Upcoming extraordinary shareholders meeting on October 28, 2025 in Gothenburg to decide on board composition, director fees, and election of a new board member (company meeting notice)

Valuation Changes

  • Fair Value: reduced from SEK 49.0 to SEK 43.0, a moderate downgrade to the target price.
  • Discount Rate: increased slightly from 6.43 percent to 6.46 percent, reflecting a marginally higher required return.
  • Revenue Growth: cut from 19.22 percent to 15.28 percent, indicating a meaningful downward revision to long term growth expectations.
  • Net Profit Margin: raised significantly from 17.95 percent to 24.91 percent, signaling stronger anticipated long term profitability.
  • Future P/E: lowered notably from 14.77x to 10.59x, implying a more conservative valuation multiple applied to future earnings.

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Disclaimer

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