Source: Inderes & Infront (04.11.25, 10 analysts) (consensus)

NIBE’s valuation has continued to moderate, while European heat pump market data continues to show positive signals of a recovery, supporting our estimates. Medium-term valuation multiples (2026: P/E 21x and EV/EBIT: 17x) are well below the company’s long-term medians and appear attractive in our view. Therefore, we believe the company’s interesting long-term investment story can be accessed with a good risk/return ratio at the current valuation, and we are updating our recommendation to Accumulate (prev. Reduce) but reiterate our target price of SEK 40.0 per share.

Investment case dependent on a volume rebound

Over its long history, NIBE has grown into an international group within heating solutions and energy control. In our view, NIBE’s investment case relies on continued investments in product development and strategic acquisitions to support long-term structural growth in energy-efficient heating solutions and drive a sales-led margin recovery. While the biggest positive driver for NIBE is sales growth, the main near-term risks to achieving this include intensified competition, regulatory uncertainty around long-term subsidies, and a weak end-consumer demand.

We expect the gradual recovery to continue in Q3’25

We expect NIBE's Q3 revenue at approximately 10.3 BNSEK, roughly in line with consensus, reflecting organic growth of 3.2% year-over-year from weak comparisons. We expect the largest business area, Climate Solutions, to drive growth with 6% organic expansion, led by European market recovery as distributor inventories have normalized. Strong momentum in Germany, with heat pump sales up 55% in H1'25 and subsidy applications growing 44% in Q3'25, should offset slower growth in Sweden and the Netherlands. In Element, we expect modest 2% organic growth with mixed segment development, while Stoves should see clear sequential improvement from a weak Q2 due to seasonal patterns, though still negative year-over-year. We estimate Q3 EBIT at 1,148 MSEK, slightly below consensus, corresponding to an ~11% operating margin, supported by increased sales, improved productivity, and disciplined cost control.

We have kept our estimates largely intact

For 2025, we continue to estimate organic growth of approximately 3%, primarily driven by Climate Solutions due to a recovery in the European heat pump market and a relatively stable North American market. According to our estimates, Stoves will remain a drag, due to weak consumer demand and persistent softness in the new construction market, while Element should see modest organic growth. For 2026–2027, we expect 6–7% organic revenue growth, supported by an improving economic environment, a recovery in the European new-build market, and improved consumer confidence. Margins should benefit from volume growth and cost control, but a significant recovery depends on a stronger volume rebound than seen in H1’25, which is uncertain given the ongoing weakness in residential markets. Considering these dynamics and NIBE's H1’25 performance, we still view NIBE's ambition to return to historical margins across all three business areas by 2025 as optimistic.

Good entry point as market recovers and valuation moderates

We believe that NIBE’s valuation is relatively high on actual earnings basis (adj. P/E LTM Q2’25: 32x). Although we expect some downward pressure on LTM earnings multiples, we believe that the medium-term earnings growth of some good 10-15% coupled with a slight dividend yield of some 1-2%, offers a total expected return above our required return. Additionally, the DCF value is also sufficiently higher than the current share price. We, therefore, consider the risk/reward ratio quite good at the current share price level.