OTLY: Margin Expansion Potential Will Drive Optimism Despite Near Term Volume Weakness

Analysts have trimmed their fair value estimate for Oatly Group to $14.00 from $16.00, reflecting softer near term retail volumes and promotional activity. They also acknowledge improving supply efficiency, early signs of portfolio recovery, and a potential path to mid single digit revenue growth with margin expansion over the next few years.

Analyst Commentary

Bearish analysts have recently recalibrated their expectations for Oatly Group, trimming price targets in response to mixed operating trends. While the company is demonstrating operational progress, the balance of commentary leans cautious as investors reassess the risk reward profile.

Recent research notes highlight that external scanner data through mid November showed soft retail volumes accompanied by heavier promotional activity. This combination points to a less favorable revenue and margin backdrop in the near term, reinforcing concerns that demand normalization could take longer than previously anticipated.

At the same time, analysts acknowledge that Oatly’s streamlined supply network and early portfolio recovery, particularly in Europe and North America, are beginning to translate into more stable execution. The first quarter of positive EBITDA is being viewed as evidence that the business model can scale profitably, though the durability of this improvement remains under scrutiny.

Despite these positives, the overall tone of recent commentary suggests that investors may need to see several more quarters of consistent performance before assigning a higher valuation multiple. With the stock still viewed as having a meaningful "show me" element, the bar for upside surprises remains elevated.

Bearish Takeaways

• Bearish analysts have cut price targets, citing soft retail volumes and increased discounting that pressure near term revenue visibility and margin resilience.
• Short term headwinds, including customer attrition and uneven category trends, raise execution risk and temper confidence in the pace of Oatly’s growth recovery.
• Even with a potential path to mid single digit revenue growth and margin expansion by the second half of fiscal 2026, valuation upside is seen as constrained until the company delivers several quarters of consistent performance.
• Broader multiple compression across the Food category, combined with Oatly’s execution track record, could keep the shares range bound as investors wait for clearer evidence of sustainable growth.

What's in the News

• Reaffirmed 2025 earnings guidance, projecting constant currency revenue growth of approximately flat to +1% for the full year (company guidance).

Valuation Changes

• Fair Value Estimate reduced from $16.00 to $14.00, representing a modest downward revision to the long term intrinsic value assessment.
• Discount Rate increased from 6.46% to 7.26%, signaling a slightly higher perceived risk profile and cost of capital.
• Revenue Growth raised from approximately 3.41% to 4.06%, reflecting a modestly more optimistic view on top line expansion over the forecast period.
• Net Profit Margin adjusted slightly lower from about 6.30% to 6.11%, implying a marginally more conservative profitability outlook.
• Future P/E reduced from 10.0x to roughly 9.2x, indicating a somewhat lower valuation multiple applied to expected earnings.