Last Update 30 Jan 26

Fair value Increased 6.60%

AKSO: Fairer Pricing Meets Mixed Upgrades And Long-Term Contract Momentum

Narrative Update

The analyst fair value estimate for Aker Solutions has shifted from NOK 33.88 to about NOK 36.11. This reflects updated views on discount rates, revenue trends, margins and future P/E, alongside recent Street research where analysts have moved their stance to Hold with a NOK 30 target and to Buy with a NOK 38 target.

Analyst Commentary

Recent research shows a shift in tone around Aker Solutions, with analysts moving from more cautious views to neutral and positive stances, paired with price targets at NOK 30 and NOK 38. Here is how that breaks down for you as an investor.

Bullish Takeaways

Bullish analysts see enough support for the story to move to Buy, which aligns with the analyst fair value estimate moving closer to the higher NOK 38 target.
The gap between the NOK 38 bullish target and the updated fair value around NOK 36.11 suggests some see further upside potential if the company executes well on earnings and cash flow.
Upgrades away from Sell and Hold indicate greater confidence that execution risks, such as delivering on orders and margins, may now be better reflected in the share price.
Supportive targets signal that, in the eyes of bullish analysts, current valuation levels are reasonable in relation to expected growth and P/E assumptions already baked into models.

Bearish Takeaways

The NOK 30 target attached to a Hold stance signals that some bearish analysts remain cautious on how much upside is left relative to their assumptions on earnings quality and project delivery.
The spread between NOK 30 and NOK 38 underlines differing views on execution risk, particularly around sustaining margins and revenue trends embedded in current forecasts.
Hold ratings show that not all analysts are comfortable assigning a premium P/E, suggesting they want clearer evidence on consistent profitability before becoming more positive.
The lower target can be a reminder that if revenue or margin expectations baked into current valuations are not met, some see limited room for the share price to move above their fair value assumptions.

What's in the News

Fearnley upgraded Aker Solutions to Buy from Hold, with a NOK 38 price target, highlighting a more constructive view on the shares (Periodicals).
Danske Bank upgraded Aker Solutions to Hold from Sell, with a NOK 30 price target, signaling reduced concern compared with its previous stance (Periodicals).
Aker Solutions secured multiple five year frame agreements with Equinor in Norway for maintenance and modifications services, with options to extend for up to five additional years. The agreements are classified as a major order intake planned for Q1 2026 in the Life Cycle segment (Key Developments).
The company signed a six year frame agreement extension with ConocoPhillips Skandinavia for brownfield maintenance and modification services on the Eldfisk and Ekofisk fields offshore Norway. The agreement is classified as substantial and is scheduled to be booked as order intake in Q4 2025 in the Life Cycle segment (Key Developments).
Aker Solutions agreed to a five year extension of its enabling contract with ExxonMobil Canada Properties for brownfield maintenance and modification services on the Hebron platform. The contract is to be booked as order intake in Q4 2025 in the Life Cycle segment (Key Developments).

Valuation Changes

Fair Value Estimate, raised slightly from NOK 33.88 to about NOK 36.11, bringing the model closer to the higher end of recent analyst targets.
Discount Rate, reduced from about 7.14% to about 6.70%, which tends to lift the calculated fair value when other inputs are held constant.
Revenue Growth, revised from roughly a 15.25% decline to about a 17.41% decline, pointing to a somewhat weaker top line outlook in the model assumptions.
Net Profit Margin, trimmed from about 4.51% to about 4.36%, reflecting slightly lower expected profitability on each unit of revenue.
Future P/E, moved up from roughly 12.7x to about 14.3x, indicating a higher assumed valuation multiple in the updated model.

High order intake in offshore wind and CCS projects could drive future revenue growth and improve project margins.
Strategic contract shifts and cost-saving synergies may enhance net margins and EBITDA, bolstering earnings growth.
Operational challenges and geopolitical risks in renewables projects might affect margins and earnings, whereas increased oil and gas tenders hint at a strategic focus shift.

Catalysts

About Aker Solutions

Provides solutions, products, systems, and services to the oil and gas industry in Norway, the United States, Brazil, the United Kingdom, Malaysia, Angola, Brunei, Canada, India, and internationally.What are the underlying business or industry changes driving this perspective?

Aker Solutions is experiencing high order intake driven by new contracts, particularly in offshore wind and carbon capture and storage (CCS) projects. This suggests potential future revenue growth as these projects are executed.
The company’s strategic shift from traditional lump-sum contracts to models with balanced risk-reward profiles and joint incentives is expected to improve project margins. This may result in better net margins as risks and upsides are more closely tied to Aker’s performance.
Significant progress on projects such as Johan Castberg FPSO and Aker BP initiatives highlights Aker Solutions’ capability to deliver complex projects. Continued success and timely execution of these projects can drive future earnings growth and improve the bottom line.
Ongoing development of synergies in its OneSubsea operations, alongside an ambition to save $100 million annually, points to cost reductions that could increase EBITDA margins over time.
With a robust tender pipeline of NOK 85 billion, primarily in Europe, and anticipated growth in the subsea and lifecycle services segments, Aker Solutions is well-positioned to expand its revenue base in the coming years.

Aker Solutions Earnings and Revenue Growth

Aker Solutions Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Aker Solutions's revenue will decrease by 15.2% annually over the next 3 years.
Analysts assume that profit margins will increase from 3.8% today to 4.5% in 3 years time.
Analysts expect earnings to reach NOK 1.6 billion (and earnings per share of NOK 3.41) by about September 2028, down from NOK 2.2 billion today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting NOK2.4 billion in earnings, and the most bearish expecting NOK1.0 billion.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 12.7x on those 2028 earnings, up from 6.6x today. This future PE is greater than the current PE for the GB Energy Services industry at 6.6x.
Analysts expect the number of shares outstanding to decline by 0.09% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 7.14%, as per the Simply Wall St company report.

Aker Solutions Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The legacy renewables projects are described as both operationally and commercially challenging, which could continue to negatively impact net margins until 2025.
Challenges in resolving commercial issues with clients and subcontractors in legacy renewables projects might prolong, creating uncertainties or additional costs, affecting earnings.
The geopolitical situation, particularly concerning tariffs and trade restrictions, is being closely monitored and could potentially disrupt the supply chain, impacting future revenue and operational costs.
The segment of oil and gas in the tender pipeline is increasing, suggesting a potential shift in focus that could impact long-term revenue stability if renewables don't perform as expected.
Potential delays in client investment decisions due to geopolitical factors could affect the timing and realization of new orders, thereby impacting future revenue streams.

Valuation

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

The analysts have a consensus price target of NOK33.875 for Aker Solutions 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 NOK44.0, and the most bearish reporting a price target of just NOK29.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be NOK35.0 billion, earnings will come to NOK1.6 billion, and it would be trading on a PE ratio of 12.7x, assuming you use a discount rate of 7.1%.
Given the current share price of NOK30.4, the analyst price target of NOK33.88 is 10.3% higher. Despite analysts expecting the underlying buisness to decline, they seem to believe it's more valuable than what the market thinks.
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.

Offshore Wind And Carbon Capture Projects Will Yield Mixed Outcomes