BRG: Dividend Policy And Higher Margins Will Support Future Fair Value

Analysts have reduced their fair value estimate for Borregaard from NOK 211.40 to NOK 200.00, reflecting updated assumptions on the discount rate, revenue growth, profit margin and future P/E following recent research, including a downgrade from SEB Equities.

Analyst Commentary

Bullish Takeaways

Bullish analysts see the revised fair value of NOK 200.00 as still implying room for execution on revenue growth and margins, even after accounting for a higher discount rate and more cautious P/E assumptions.
They point to the updated model as a cleaner baseline and argue that expectations now better reflect current research inputs, which can reduce the risk of earnings or valuation surprises for investors.
Supportive views highlight that the downgrade and fair value cut are driven by assumption changes rather than any newly disclosed financial shock. They view this as a more measured recalibration rather than a fundamental reset.
Some bullish analysts argue that a more conservative stance from the Street can lower sentiment risk. In their view, any progress on revenue or profitability relative to these tempered assumptions could be rewarded by the market.

Bearish Takeaways

Bearish analysts focus on the cut in fair value from NOK 211.40 to NOK 200.00 as a signal that the risk profile has shifted, with higher discount rate assumptions and a more cautious view on future P/E weighing on valuation.
They are concerned that the need to revisit revenue growth and margin expectations indicates greater execution risk, particularly if the company does not meet the updated modelling assumptions reflected in the recent research.
Some see the downgrade as a warning that previous valuation support was too optimistic, and that investors may need to factor in a wider range of outcomes on both earnings and multiples.
Bearish analysts also flag that further research changes could follow if the operating backdrop or company specific trends weaken relative to these latest assumptions. In that scenario, they believe fair value estimates could remain under downward pressure.

What's in the News

The Board of Directors held a meeting on 3 February 2026 to consider proposing an ordinary dividend for 2025 of NOK 4.75 per share to the Annual General Meeting (Board Meeting).
At the same meeting, the Board decided to propose an ordinary dividend for 2025 of NOK 4.75 per share, with an estimated total dividend payment of NOK 474 million, subject to approval by the Annual General Meeting (Dividend Increases).
No dividend is planned to be paid on treasury shares held by the Borregaard Group, so the final payout amount will depend on how many treasury shares are held at the time of the Annual General Meeting (Dividend Increases).
Shares acquired up to and including 16 April 2026 are set to carry dividend rights. Shares acquired on or after 17 April 2026 are set to trade ex dividend, with payment scheduled for 27 April 2026 to shareholders recorded as of 20 April 2026 (Dividend Increases).
The Annual General Meeting is scheduled for Thursday 16 April 2026 at 1 p.m. (13:00 CEST) in Sarpsborg as a digital meeting, where the proposed dividend is expected to be considered (Dividend Increases).

Valuation Changes

Fair Value: Adjusted from NOK 211.40 to NOK 200.00, representing a modest reduction in the equity value underpinning the updated model.
Discount Rate: Increased slightly from 6.92% to 7.11%, indicating a somewhat higher required return in the valuation work.
Revenue Growth: Reduced from 5.91% to 5.48%, reflecting slightly more cautious assumptions for future top line expansion.
Net Profit Margin: Raised from 12.67% to 13.67%, indicating a somewhat higher expected profitability level in the forecasts.
Future P/E: Lowered from 22.29x to 19.67x, indicating a more moderate valuation multiple applied to expected earnings.

Strong demand for green products and high-value specialties is expected to boost sales and margins, driving revenue growth for Borregaard.
Operational improvements and currency hedging could stabilize revenue and enhance financial resilience despite trade and currency challenges.
Trade tensions and increased expenses could affect Borregaard's revenue and margins, while reliance on agriculture exposes it to sector-specific risks.

Catalysts

About Borregaard

Engages in the development, production, and marketing of specialized biochemicals and biomaterials in Norway, rest of Europe, Asia, the United States, and internationally.What are the underlying business or industry changes driving this perspective?

Strong sales in the agriculture segment, driven by the increasing demand for green and biocontrol products, are expected to positively impact revenue growth and EBITDA margins.
The favorable product mix in BioSolutions, particularly with high-value specialty products, is anticipated to boost overall earnings and contribute to higher net margins.
Tariffs and trade dynamics, although presenting some uncertainty, might have less impact on Borregaard due to its highly specialized products and diverse market presence, thereby potentially stabilizing revenue despite global trade fluctuations.
Continuous investment and focus on operational improvements, such as the electrification of biopolymer spray dryers to reduce energy costs, are likely to enhance net margins over time.
Ongoing currency hedging strategies and anticipated positive currency effects are expected to have a favorable impact on EBITDA and earnings, providing financial resilience amidst currency volatility.

Borregaard Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Borregaard's revenue will grow by 5.7% annually over the next 3 years.
Analysts assume that profit margins will increase from 11.4% today to 14.8% in 3 years time.
Analysts expect earnings to reach NOK 1.4 billion (and earnings per share of NOK 12.5) by about September 2028, up from NOK 885.0 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 19.3x on those 2028 earnings, down from 23.2x today. This future PE is lower than the current PE for the GB Chemicals industry at 22.4x.
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 6.78%, as per the Simply Wall St company report.

Borregaard Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The introduction of a 10% tariff on imports from Norway into the U.S. could impact Borregaard's revenues from their U.S. sales, as 10% of their sales last year came from Norway to the U.S. The lower volume of exports due to these tariffs might have a negative effect on revenue.
Increased supply of advanced bioethanol in Europe, based on agricultural waste, is expected to lead to significantly lower sales prices for Borregaard's bioethanol, which could decrease revenue and impact net margins in the Fine Chemicals segment.
Higher wood and logistical costs have increased expenses for Borregaard, which could limit the company's ability to increase net margins and impact overall profitability.
Potential negative effects on global GDP growth from tariffs and trade tensions could ultimately reduce demand for Borregaard's products, affecting revenue growth across its segments.
The strong current reliance on the agricultural sector for BioSolutions' revenues might expose Borregaard to risks associated with any downturn in agriculture or shifts in customer demand, potentially impacting revenues and earnings.

Valuation

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

The analysts have a consensus price target of NOK217.5 for Borregaard based on their expectations of its future earnings growth, profit margins and other risk factors.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be NOK9.2 billion, earnings will come to NOK1.4 billion, and it would be trading on a PE ratio of 19.3x, assuming you use a discount rate of 6.8%.
Given the current share price of NOK206.0, the analyst price target of NOK217.5 is 5.3% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
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.

Analysts Adjust Borregaard Price Target and Valuation Following Recent Updates and Ongoing Developments