Translation: Original published in Finnish on 10/19/2026 at 9:00 pm EEST.

Wärtsilä will host a Capital Markets Day (CMD) on Tuesday, November 3. We expect the company to set significantly higher financial targets for its remaining core businesses, Marine and Energy, with Energy driven by data centers and balancing power demand from renewables. A strong improvement in new equipment sales profitability could bring the valuation to very attractive levels in the medium term.  Even if the AI-driven investment cycle were to fizzle out and new equipment profitability were to collapse – which is possible – we see the high share of earnings from Services limiting the downside in a negative scenario.  We reiterate our Accumulate recommendation and EUR 33 target price.

Significant upgrades to financial targets expected

Following the divestments of recent years, Wärtsilä’s business will consist solely of Marine and Energy, whose profitable services business has long generated the majority of the company’s earnings. Under its previous strategy, the company set a combined revenue growth target of 5% and an EBIT margin target of 14% for Marine and Energy.  We expect the EBIT margin target to rise to 16–17% or higher by 2030, assuming a marked improvement in new equipment profitability, supported by recent order trends. We expect the revenue growth target to exceed 10% annually. On our current forecasts, revenue growth for 2027–2030 would be 10% annually, even though we assume order growth of only 3% per year (reflecting a decline in new equipment orders as data center demand is expected to cool).

We revised our medium-term earnings upward

We made moderate changes to our forecasts, mainly raising our earnings estimates for the end of the decade supported by the strong order backlog for new equipment (EBIT for 2028–2030 rose by 5–11%). Our profitability estimates decline somewhat in the early 2030s, as we estimate that supply growth will weaken Wärtsilä's pricing power in new equipment sales compared to the current exceptional market dynamics.

Limited downside, significant medium-term upside

Wärtsilä is a global leader in medium-speed engines, and the quality of its business is underpinned by the high share of predictable service earnings (2025: ~77%).  Should our forecasts materialize, the earnings-based valuation would fall to quite a favorable level (2030e: 8.6x) against the ~15x multiple we consider fair.  Our base scenario, based on moderate order forecasts, would show a margin of up to approximately 20% based on 2030 results, which will grow supported by the margin of new equipment sales. If data center orders continue to grow, the upside could be several times greater. On the other hand, the share should not be valued solely against potential supercycle peak earnings. If data center-driven demand were to disappear and new equipment margins were to return to 2025 levels, the current share price would be close to fair value. In our view, the high share of services in earnings and the growth potential in the 2030s from the expanding installed base limit the downside risk and support the risk/reward, even though new equipment margins are difficult to predict.

We published our Q3’26 preview for Wärtsilä on October 7 (in Finnish), and its contents remain relevant, as we make no changes to our short-term forecasts in this update.  Wärtsilä reports its Q3 results on Tuesday, October 27, ahead of its CMD.