Local Manufacturing And Cross-Selling Will Unlock Adjacent Specialty Markets

Key Takeaways

• Expansion into high-growth specialty applications and structural market trends positions Mativ for improved revenue stability and long-term profitability.
  
• Operational optimization, local manufacturing strategy, and merger integration are expected to strengthen margins, cash flow, and competitive resilience.
  
• Persistent weak demand, margin pressure, high debt, execution risks, and intense industry challenges threaten profitability, financial flexibility, and long-term stability.

Catalysts

Manufactures and sells specialty materials in the United States, Europe, the Asia Pacific, the Americas, and internationally.

• Mativ is accelerating its commercial execution through enhanced cross-selling, pipeline management, and go-to-market alignment, explicitly targeting new and adjacent specialty applications (healthcare, optical, medical, and dental films); this positions the company to capture growth from expanding end-markets like healthcare, personal care, and sustainable packaging, supporting higher organic revenue growth and reducing cyclicality.
  
• Cost reduction and operational optimization initiatives—$30–$35 million in targeted savings by year-end 2026, with $10–$15 million to be realized in 2025—as well as supply chain delayering and SG&A reductions, are expected to meaningfully improve EBITDA margins and accelerate free cash flow generation, enabling debt reduction and future earnings growth.
  
• Mativ is actively shifting its portfolio mix towards markets and solutions with structural tailwinds (such as filtration for air/water quality, eco-friendly materials, and electrification), leveraging both innovation and market trends to support a transition to higher-margin, lower-cyclicality businesses—driving long-term revenue quality and profitability.
  
• Strategic focus on local manufacturing and “local for local” supply chains limits exposure to tariffs and global trade tensions, securing access to growth markets and providing a competitive advantage that should support stable revenues even as global geopolitical and regulatory risks rise.
  
• The ongoing integration of SWM and Neenah (including a strategic review for additional divestitures or focus) is expected to deliver further synergies through manufacturing optimization and portfolio rationalization, which should expand operating margins and enhance overall earnings power as secular demand for innovative filtration and specialty materials grows.

Mativ Holdings Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Mativ Holdings's revenue will grow by 1.7% annually over the next 3 years.
• Analysts are not forecasting that Mativ Holdings will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Mativ Holdings's profit margin will increase from -22.7% to the average US Chemicals industry of 7.8% in 3 years.
• If Mativ Holdings's profit margin were to converge on the industry average, you could expect earnings to reach $160.4 million (and earnings per share of $2.92) by about May 2028, up from $-446.6 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 6.2x on those 2028 earnings, up from -0.7x today. This future PE is lower than the current PE for the US Chemicals industry at 23.2x.
• Analysts expect the number of shares outstanding to grow by 0.56% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 11.41%, as per the Simply Wall St company report.

Mativ Holdings Future Earnings Per Share Growth

Risks

• Weak and uncertain long-term demand trends in core end-markets, particularly in automotive and construction (which account for around 85% of the FAM segment), could persist or worsen, suppressing volume growth and leading to continued revenue contraction despite operational improvements.
  
• Sustained margin compression remains a significant risk, as management acknowledges margin levels are still roughly half of where the legacy companies stood pre-merger; resolving this may require portfolio divestitures or footprint reduction, with ongoing pricing and input cost pressures threatening net margins.
  
• Elevated leverage and substantial debt (net leverage ratio at 4.7x, with a target of 2.5x–3.5x), combined with limited flexibility due to ongoing dividend commitments, expose the company to higher refinancing risk and restrict reinvestment, adversely impacting earnings and long-term financial stability.
  
• Lack of visible progress on strategic portfolio review and potential execution risks in shifting toward higher-value segments creates uncertainty; failure to reduce exposure to declining or underperforming segments could lead to persistent underutilized assets and drag on return on capital.
  
• Industry-wide competition and regulatory challenges, such as unfavorable currency, increasing compliance costs, and more innovative/lower-cost producers, may erode market share and pricing power, impeding growth in both revenues and profitability long-term.

Valuation

• The analysts have a consensus price target of $13.0 for Mativ Holdings 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 $16.0, and the most bearish reporting a price target of just $10.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $2.1 billion, earnings will come to $160.4 million, and it would be trading on a PE ratio of 6.2x, assuming you use a discount rate of 11.4%.
  
• Given the current share price of $6.06, the analyst price target of $13.0 is 53.4% 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.