Last Update 11 Feb 26

Fair value Decreased 34%

EAF: Margin Resilience And 2026 Volume Outlook Will Support Upside

Analysts have reduced their price target on GrafTech International from US$14.75 to US$9.75, citing updated assumptions for revenue growth, profit margins, and a lower forward P/E multiple.

Analyst Commentary

Recent Street research on GrafTech International points to a cluster of lower price targets, including cuts of US$11, US$5, and US$4, as analysts reset their expectations for revenue, margins, and the appropriate forward P/E multiple.

Bullish Takeaways

Bullish analysts still see value in the shares even after multiple price target cuts, which suggests they believe the recent repricing already reflects many of the risks being discussed.
The continued use of a forward P/E framework indicates there is still an assumption of earnings power over time, rather than a view that earnings are structurally impaired.
Target revisions appear to be driven by updated modeling inputs for growth and profitability, not by a complete change in view on the company’s ability to execute its business plan.
Ongoing coverage from large firms such as JPMorgan keeps the company on institutional investors’ radar, which can support liquidity and interest in the stock.

Bearish Takeaways

Bearish analysts are lowering price targets by meaningful amounts, which signals reduced conviction around the previous valuation levels and a more cautious stance on execution risk.
The shift to a lower forward P/E multiple implies that analysts are pricing in higher uncertainty around earnings quality or sustainability.
Revisions tied to updated assumptions for revenue growth and margins suggest concern that prior expectations for operational performance may have been too optimistic.
The clustering of multiple downward revisions over a short period points to a less favorable Street sentiment, which can weigh on the stock’s near term valuation until new data points emerge.

What's in the News

GrafTech International issued new sales guidance for 2026, outlining expectations for full year sales volume in the context of its customer value proposition and focus on meeting customer needs (Key Developments).
The company expects a 5% to 10% year over year increase in sales volume for 2026 on a full year basis, linked to what it describes as gaining market share (Key Developments).
For the first quarter of 2026, GrafTech International expects an approximately 10% year over year increase in other sales volume, providing an early benchmark within its full year outlook (Key Developments).

Valuation Changes

Fair Value: Target fair value moved from US$14.75 to US$9.75, which represents a sizable reset in the modeled upside for the shares.
Discount Rate: The discount rate shifted slightly from 12.5% to 12.33%, a modest change in the required return used in the analysis.
Revenue Growth: Assumed revenue growth moved from 10.63% to 7.70%, reflecting a more cautious outlook on top line expansion in the model.
Net Profit Margin: Modeled profit margin increased from 12.32% to 13.55%, indicating expectations for a somewhat higher share of revenue translating into earnings.
Future P/E: The forward P/E assumption moved from 6.27x to 4.21x, pointing to a lower valuation multiple being applied to the company’s projected earnings.

Shift to electric arc furnaces and supportive government policies are driving sustained demand and higher pricing opportunities for graphite electrodes.
Vertically integrated supply chain and new growth channels in Western anode and EV markets are strengthening margins and supporting future revenue diversification.
Persistent oversupply and weak pricing, heavy US reliance, raw material uncertainty, and subdued steel demand combine to threaten future margin stability and sustainable earnings recovery.

Catalysts

About GrafTech International

Research, develops, manufactures, and sells graphite and carbon-based solutions worldwide.What are the underlying business or industry changes driving this perspective?

Ongoing shift of steel production from blast furnaces to electric arc furnaces (EAF), particularly in the U.S. and Europe, due to increased infrastructure spending and decarbonization initiatives, is set to drive sustained long-term demand for graphite electrodes, supporting future revenue growth.
Expansion of U.S. steel tariffs and government-backed policies are incentivizing more domestic EAF steel output and creating a favorable competitive environment for GrafTech, which has already gained significant market share in the U.S.; this is likely to boost both top-line revenue and average selling prices in the coming years.
GrafTech's vertically integrated supply chain, especially its proprietary access to petroleum needle coke, supports lower input costs and greater resilience against raw material price volatility, positioning the company for sustained improvement in net margins and earnings as volumes grow.
Recent and expected future price increases on uncommitted electrode volumes, combined with shifting geographic sales mix toward higher-priced U.S. and Western European markets, are expected to improve average selling prices and enhance EBITDA as industry pricing recovers from the trough.
The company's strategic position and technical capabilities in providing critical raw materials for emerging Western anode and EV supply chains-bolstered by recent U.S. regulatory actions and potential public-private partnerships-point to a medium
to long-term new growth avenue, supporting future revenue diversification and additional margin expansion.

GrafTech International Earnings and Revenue Growth

GrafTech International Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming GrafTech International's revenue will grow by 24.5% annually over the next 3 years.
Analysts are not forecasting that GrafTech International will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate GrafTech International's profit margin will increase from -41.6% to the average US Electrical industry of 10.2% in 3 years.
If GrafTech International's profit margin were to converge on the industry average, you could expect earnings to reach $99.6 million (and earnings per share of $3.83) by about September 2028, up from $-211.8 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 4.9x on those 2028 earnings, up from -1.1x today. This future PE is lower than the current PE for the US Electrical industry at 29.6x.
Analysts expect the number of shares outstanding to grow by 0.38% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 12.32%, as per the Simply Wall St company report.

GrafTech International Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Persistent global oversupply of graphite electrodes, especially due to increased low-priced exports from China, continues to exert downward pressure on prices across most regions; this ongoing excess capacity threatens sustained revenue growth and could compress net margins long-term if industry pricing does not materially improve.
The company's cost improvements have partially offset lower average selling prices, but management acknowledges current pricing is still below sustainable levels for long-term profitability-suggesting that without a durable recovery in market pricing, future earnings and free cash flow generation may remain under pressure.
Heavy reliance on the U.S. market (over 50% of revenues) and further strategic effort to increase market share in this region exposes GrafTech to potential policy, demand, or competitive disruptions in a single geography, increasing the risk of future revenue and earnings volatility.
The needle coke market, while currently stable, faces uncertain medium
to long-term dynamics-including limited new Western supply announcements and rising raw material demand from both graphite electrode production and the emerging EV/energy storage sector-which could tighten supply, push up input costs, and negatively impact net margins if not carefully managed.
Although management anticipates long-term structural tailwinds from decarbonization and electrification trends favoring electric arc furnace steelmaking, the relatively flat or declining steel production in key regions (EU down, global ex-China flat), delayed EAF transition plans in Europe, and muted near-term end-market recovery present ongoing demand-side risks to revenue growth and normalization of profitability.

Valuation

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

The analysts have a consensus price target of $13.25 for GrafTech International 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 $20.0, and the most bearish reporting a price target of just $8.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $980.4 million, earnings will come to $99.6 million, and it would be trading on a PE ratio of 4.9x, assuming you use a discount rate of 12.3%.
Given the current share price of $9.13, the analyst price target of $13.25 is 31.1% 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.

Have other thoughts on GrafTech International?

Create your own narrative on this stock, and estimate its Fair Value using our Valuator tool.

Create Narrative

How well do narratives help inform your perspective?

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.

Decarbonization And EAF Transition Will Revitalize Steel Supply Chains