Last Update 09 Dec 25

Fair value Decreased 0.53%

HEXA B: Rating Shifts And Execution Will Shape Balanced Near-Term Share Outlook

The analyst price target for Hexagon has been raised modestly, supported by analysts highlighting incremental improvements in long term revenue growth and profitability expectations, despite a slightly higher discount rate.

Analyst Commentary

Recent Street research paints a mixed but generally constructive picture, with incremental target price increases and rating adjustments reflecting debate around Hexagon's risk reward profile.

Bullish analysts are pointing to steady execution and resilient end market demand as reasons to nudge price targets higher, while more cautious voices highlight that the current valuation already discounts a robust growth trajectory.

Overall, the shift in recommendations and target prices suggests investors are recalibrating expectations around the balance between long term growth potential and near term multiple compression risk.

Bullish Takeaways

Multiple bullish analysts have raised their target prices into the SEK 110 to 130 range, signalling confidence that Hexagon can compound earnings at a pace that supports a higher equity valuation.
Upgrades in rating and target hikes indicate growing conviction that the company can execute on its strategic roadmap, particularly in software centric and recurring revenue segments that support margin expansion.
The upward drift in targets over a relatively short period suggests that positive datapoints from recent quarters are being viewed as sustainable rather than transitory, underpinning a constructive long term growth narrative.
Bullish analysts appear comfortable that operational delivery and cash generation can offset a slightly higher discount rate, keeping the equity attractive versus broader industrial tech peers.

Bearish Takeaways

Several bearish analysts have moved ratings down to Hold, signalling that, at current levels, the share price already reflects much of the anticipated growth and self help benefits.
Cautious commentary highlights limited upside versus new target prices in the mid 120s SEK, pointing to a valuation that leaves less room for execution missteps or macro softness.
Some analysts remain unconvinced that further near term re rating is likely, arguing that the risk reward is now more balanced after the latest rally and target upgrades.
There is concern that, without a clear acceleration in organic growth or a step change in margin trajectory, Hexagon may struggle to materially outperform a sector that is itself priced for solid growth.

What's in the News

Hexagon's Asset Lifecycle Intelligence division and Management Controls Inc. launched the EcoSys + myTrack Connector, integrating Hexagon's EcoSys Enterprise Project Performance platform with MCi's contractor data management solution to provide real time, verified contractor actuals and reduce financial leakage (company announcement).
The new EcoSys plus myTrack Connector automates the flow of contractor cost data into EcoSys, improving forecasting accuracy, accelerating project closeouts, and eliminating manual reconciliations and delays for global customers (company announcement).
Hexagon AB hosted an Analyst and Investor Day, providing updates on strategy, growth initiatives, and financial priorities to the investment community (company event).

Valuation Changes

Fair Value Estimate edged down slightly to approximately SEK 121.20 from SEK 121.85, indicating a marginally lower intrinsic valuation.
Discount Rate increased slightly to about 6.79 percent from 6.74 percent, reflecting a modestly higher required return in the cash flow discounting assumptions.
Revenue Growth ticked up marginally to roughly 5.42 percent from 5.42 percent, signalling a negligible improvement in long term top line expectations.
Net Profit Margin eased fractionally to around 21.06 percent from 21.06 percent, implying virtually unchanged profitability assumptions.
Future P/E moved up slightly to about 27.0x from 26.9x, suggesting a modestly higher valuation multiple being applied to forward earnings.

Innovative product launches and focus on automation and robotics are set to drive above-market growth and expand margins across diverse industrial sectors.
Growing recurring software revenues and cost improvement initiatives are boosting earnings predictability and profitability while management sharpens its strategic focus on high-margin technologies.
Margin pressure, end-market weakness, FX volatility, delayed returns on innovation, and organizational changes threaten Hexagon's earnings stability and growth prospects.

Catalysts

About Hexagon

Provides geospatial and industrial enterprise solutions worldwide.What are the underlying business or industry changes driving this perspective?

Upcoming launches of highly innovative products such as the AEON humanoid robot and the MAESTRO CMM automation platform position Hexagon to capture increased demand from the accelerating digitalization, automation, and robotics adoption across manufacturing and industrial markets-likely to drive above-market revenue growth and expand margins as these offerings scale starting in 2026.
The company's growing base of recurring software and SaaS revenues (particularly in Asset Lifecycle Intelligence and SIG) continues to improve the quality and predictability of Hexagon's revenue streams, supporting gross margin expansion and providing a stabilizing influence on earnings.
Strategic focus on fast-growing verticals such as public safety, aerospace, defense, and electronics-sectors benefiting from rising regulatory, security, and precision requirements-should translate into resilient organic growth and diversified earnings, even amid cyclicality in legacy end markets.
The spin-off of the Octave software business, set for H1 2026, is expected to unlock management focus, allow Hexagon to double down on core high-margin precision measurement and robotics technologies, and potentially refocus capital allocation, all supporting higher long-term profitability and improved return on equity.
The imminent implementation of a new cost improvement program in response to previous cost base misalignment is likely to directly support operating margins, boosting net margins and improving earnings power as revenue momentum returns with the rollout of the new product cycle.

Hexagon Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Hexagon's revenue will grow by 5.2% annually over the next 3 years.
Analysts assume that profit margins will increase from 17.3% today to 20.7% in 3 years time.
Analysts expect earnings to reach €1.3 billion (and earnings per share of €0.49) by about September 2028, up from €941.9 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as €1.2 billion.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 25.6x on those 2028 earnings, down from 26.7x today. This future PE is lower than the current PE for the GB Electronic industry at 27.1x.
Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
To value all of this in today's terms, we will use a discount rate of 6.52%, as per the Simply Wall St company report.

Hexagon Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Persistent margin pressure from higher operational costs and a misaligned cost base, as evidenced by repeated cost-saving programs and recent margin declines, could depress long-term earnings and net margins if not sustainably addressed.
Prolonged weakness and unpredictability in key end-markets-particularly European and Chinese construction-are resulting in declining or flat revenues for divisions like Geosystems, exposing Hexagon to cyclical risks and jeopardizing organic growth targets.
Currency volatility and negative FX trends, with significant recent EBIT headwinds from USD and CNY depreciation and Swiss franc appreciation, continue to impact earnings unpredictably and could create further revenue and margin instability in the long term.
Heavy R&D investment and ramp-up costs for new products (e.g., robotics, MAESTRO), while promising, may take longer than expected to positively impact revenues and margins; if market adoption lags or competitors outpace Hexagon in AI/robotics, there is risk of product obsolescence and declining ROI on innovation.
The planned spin-off of Octave and frequent restructuring create organizational uncertainty and potential integration or execution risks, which could lead to operational inefficiencies, loss of focus in growth markets, and ultimately impact both revenue growth and profitability.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of SEK113.438 for Hexagon based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of SEK144.88, and the most bearish reporting a price target of just SEK88.94.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €6.3 billion, earnings will come to €1.3 billion, and it would be trading on a PE ratio of 25.6x, assuming you use a discount rate of 6.5%.
Given the current share price of SEK103.05, the analyst price target of SEK113.44 is 9.2% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Operational Progress Will Continue Driving Modest Gains Amid Industry Headwinds