Last Update 23 Mar 26

SKF B: Mixed Rating Shifts Will Support Constructive SEK 260 Upside Potential

Analysts have made a modest upward shift in the SEK price target for AB SKF, with recent SEK 260 updates described in the context of mixed rating changes and revised expectations for margins, discount rates and future P/E multiples.

Analyst Commentary

Recent research on AB SKF reflects a mixed backdrop, with some firms adjusting price targets higher toward SEK 260 while several large houses have moved to more cautious ratings. For you as an investor, that creates a split picture on valuation and execution risk.

Bullish Takeaways

Bullish analysts see room for the shares to align with revised price targets around SEK 260, suggesting they view the current valuation as broadly in line with their updated assumptions.
Upward target moves are tied to refreshed models on margins and discount rates, indicating that current earnings power is viewed as sufficient to support these levels under their base case.
Some research points to support for existing or slightly higher P/E multiples, implying that the business profile still commands a reasonable earnings valuation in their view.
The presence of Neutral ratings alongside higher targets signals that, while upside may not be seen as open ended, analysts do not universally see the shares as stretched at present levels.

Bearish Takeaways

Multiple downgrades, including from larger firms such as JPMorgan and Goldman Sachs, highlight concern that the risk and reward profile has become less attractive at recent prices.
Bearish analysts appear focused on execution risks that could affect margins or growth, which would pressure earnings support for current and prior P/E assumptions.
Target reductions from some banks sit alongside downgrades, pointing to a view that prior valuation frameworks were too optimistic given updated inputs.
The clustering of cautious calls over a short period signals a growing focus on potential downside scenarios rather than upside surprises, which is important context if you are sensitive to drawdown risk.

What's in the News

AB SKF has proposed amendments to its Articles of Association related to the term of office for the appointed auditor, with the changes to § 9 to be decided at the Annual General Meeting on April 21, 2026. (Company proposal)
The company plans to launch the FlowMaster III lubrication pump at CONEXPO-CON/AGG 2026 in Las Vegas, with orders expected to open in June, targeting heavy-use sectors such as mining, construction, industrial, agricultural, and oil and gas. (Product announcement)
FlowMaster III is described as a modular lubrication system with direct-drive pumping technology, multiple reservoir sizes from 60 lb to 400 lb, and configurations for 24 VDC or hydraulic motors, designed for compatibility with both progressive and single-line lubrication architectures. (Product announcement)
AB SKF is presenting condition monitoring and bearing remanufacturing solutions at the maintenance trade fair in Dortmund on February 25 and 26, 2026, including the IMx1 starter package and an updated Quick Collect Sensor CMDT 392, with a 15% discount offer on new sensor orders at the event. (Product announcement)
For the first quarter of 2026, AB SKF expects a currency impact on operating profit of around SEK 800 million year over year, based on exchange rates as of December 31, 2025. (Earnings guidance)

Valuation Changes

Fair Value: SEK 261.63 is unchanged, indicating no adjustment in the central valuation output.
Discount Rate: risen slightly from 6.71% to 6.77%, a modest increase in the required return used in the model.
Revenue Growth: edged down from 99.18% to 98.89%, a very small reduction in the assumed growth input.
Net Profit Margin: moved from 9.43% to 9.02%, reflecting a slightly lower profitability assumption in the forecasts.
Future P/E: increased from 16.27x to 17.03x, indicating a somewhat higher valuation multiple applied to projected earnings.

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Key Takeaways

Strategic focus on industrial automation, digitalization, and sustainability positions SKF for improved operational efficiency and higher-margin, stable revenue streams.
Exiting the automotive segment enables better capital allocation and reduces exposure to volatile markets, supporting higher earnings quality.
Overexposure to declining automotive sales, execution risks in division separation, non-repeatable regional growth, currency headwinds, and costly restructuring threaten margins and earnings stability.

Catalysts

About AB SKF

Designs, manufactures, and sells bearings and units, seals, lubrication systems, condition monitoring, and services worldwide.What are the underlying business or industry changes driving this perspective?

The ongoing automation and digitalization of manufacturing, along with AB SKF's continued investments in automation, manufacturing regionalization, and rightsizing are expected to enhance operational efficiency and support sustained improvements in operating and EBITDA margins over the next several years.
The expansion and modernization of the industrial segment-now contributing 72% of sales and 89% of adjusted operating profit-positions SKF to benefit from the global push for energy efficiency and sustainability, driving future revenue growth from advanced, energy-efficient bearing solutions.
Strategic investments and commercial excellence initiatives in high-growth verticals such as aerospace (including increased aftermarket presence and doubling of capacity investments) are expected to deliver above-average sales growth and margin uplift, supporting premium pricing and gross margin expansion.
SKF's development and rollout of predictive maintenance, smart bearings, and digital service solutions-leveraging trends toward digitalization and IoT integration in manufacturing-are likely to grow higher-margin, recurring service and maintenance revenue streams, raising both revenue stability and overall margins.
The separation of the underperforming automotive segment and portfolio focus on core industrial businesses will allow SKF to allocate capital more efficiently, improving future earnings quality and reducing earnings volatility tied to cyclical automotive demand.

AB SKF Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming AB SKF's revenue will remain fairly flat over the next 3 years.
Analysts assume that profit margins will increase from 4.3% today to 9.0% in 3 years time.
Analysts expect earnings to reach SEK 8.5 billion (and earnings per share of SEK 18.72) by about March 2029, up from SEK 3.9 billion today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting SEK10.3 billion in earnings, and the most bearish expecting SEK6.8 billion.
In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 17.0x on those 2029 earnings, down from 24.4x today. This future PE is lower than the current PE for the GB Machinery industry at 20.7x.
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 6.77%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

AB SKF's heavy reliance on the automotive sector, which continues to experience significant organic sales declines, exposes the company to secular risks from accelerating electrification and declining demand for traditional bearings, potentially leading to long-term revenue and earnings pressure.
The ongoing separation of the automotive division is still subject to considerable execution and timing risk, with management acknowledging continued critical milestones and potential for delays; unresolved separation costs and operational dis-synergies could negatively impact net margins and future cash flows.
Recent growth "green shoots" in markets like China wind and Southeast Asia appear to be driven primarily by policy-driven prebuying and timing effects rather than sustainable demand, suggesting that reported regional growth rates may not be repeatable and increasing volatility in revenues.
Continued FX headwinds have materially impacted top-line reported figures (nearly –10% in the most recent quarter), and the company is unable to forecast relief, which could depress reported earnings and return on capital employed if unfavorable currency trends persist.
The company's restructuring and rightsizing program, while intended to boost competitiveness, entails sizable near-term cash costs and workforce reductions; if demand does not recover or cost savings fall short, AB SKF may experience margin compression and slower progress on earnings improvement.

Valuation

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

The analysts have a consensus price target of SEK261.62 for AB SKF 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 SEK310.0, and the most bearish reporting a price target of just SEK205.0.
In order for you to agree with the analysts, you'd need to believe that by 2029, revenues will be SEK94.3 billion, earnings will come to SEK8.5 billion, and it would be trading on a PE ratio of 17.0x, assuming you use a discount rate of 6.8%.
Given the current share price of SEK210.8, the analyst price target of SEK261.62 is 19.4% 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.

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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.

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