Solar Foods H2'25: Story progresses, but a strong stomach is required

Translation: Original published in Finnish on 2/27/2026 at 8:00 am EET.

In terms of figures, Solar Foods' earnings day did not reveal any major surprises. However, the earnings day shed light on some of the most important milestones of the current year leading up to the final investment decision on the industrial-scale Factory 02, which is critical to the investment story. The company has made good progress in reducing the risk profile of its investment story and bringing Factory 02 to fruition, but at the current valuation level, we still believe the risks of the story outweigh its potential. We reiterate our EUR 5.3 target price and Reduce recommendation.

No big surprises in the figures

As expected, Solar Foods' H2'25 revenue was negligible, but the announced supply agreements reinforce the outlook for future growth. The company's cost structure was slightly more substantial than we had anticipated, resulting in an operating loss somewhat deeper than our forecast. Despite the earnings miss, Solar Foods' free cash flow, however, exceeded our estimates, supported by grants recognized during the review period. At the end of 2025, the company's balance sheet position was strained due to loss-making operations and net debt of 8.9 MEUR. The subsequent 25 MEUR capital raise has significantly strengthened the company's financial position and provided much-needed leeway.

Milestones towards Factory 02 become more concrete

Solar Foods aims to make the final investment decision for Factory 02 by the end of this year. However, the company has a clear plan of action to advance the final investment decision. These include, e.g. 1) finding strategic platform partners like GEA for the factory investment, 2) obtaining Solein regulatory approval in Europe and the United Kingdom, as well as a no-questions-asked letter from the US FDA, 3) converting letters of intent for Factory 02's production capacity into binding agreements, and 4) securing the financing required for the factory investment. Factory 02 is at the core of the investment case in its current development phase. Solar Foods estimates that the company's share of the investment for the first two phases of the factory would be 179-199 MEUR, 89 MEUR of which would come from grants. The company still needs to secure significant new funding to achieve this, but the directed share issue in January, in which GEA and Fazer participated, improves our view of the company's ability to successfully implement the project. The factory is scheduled to be operational in 2028 and will play a critical role in achieving profitable results. The company estimates that it will generate revenue of 97-119 MEUR and an EBIT of 31-37 MEUR with the first two phases of Factory 02 and 6.4 kilotons of Solein production. Our estimates are slightly below the company's, with our 2030 EBIT estimate settling at 28 MEUR. The most significant variables for the company's long-term earnings potential are related to the industrial-scale selling price and manufacturing cost of Solein.

Risk/reward improved due to increased clarity

Due to Solar Foods' significant investment needs and cash flows being far in the future, the range of outcomes for the investment case is exceptionally wide. This is reflected in our fair value range, which relies on DCF model scenarios and is set at EUR 3.3-7.9. The model's baseline scenario is in line with our target price. Due to Solar Foods' early development stage, news flow and sentiment surrounding the stock are the key drivers of the share price in the short term. In our view, with the liquidity risk removed, the share offers a more attractive investment thesis surrounding the upcoming news flow. While the identifiable share price drivers have led to a more balanced risk/reward, we find the share to be correctly valued against our fair value range. For this reason, we continue to maintain a cautious stance regarding cash flows in the distant future at present value.