Last Update 07 Feb 26

Fair value Increased 11%

FRVIA: Portfolio Review And Divestment Plans Will Shape Future Risk Balance

Narrative Update

Analysts have raised their fair value estimate for Forvia from €13.78 to €15.23, citing recent price target revisions and updated assumptions on the discount rate, revenue growth, profit margins and future P/E expectations.

Analyst Commentary

Recent price target updates indicate that research desks are reassessing Forvia's risk and reward profile, with fresh views on where the shares could reasonably trade relative to earnings and execution expectations.

Bullish Takeaways

Bullish analysts are lifting price targets, which signals a higher assessed fair value range for the shares, even while some ratings remain more neutral, such as Equal Weight.
The upward moves in targets suggest increased confidence that Forvia can support current valuation assumptions tied to its earnings outlook and balance of risks.
These higher targets indicate that, at least for some analysts, the risk premium baked into previous models may have been too conservative relative to the company’s expected delivery against its plans.
For investors, the cluster of higher target numbers provides a clearer reference band for where professional models currently place upside potential versus present pricing.

Bearish Takeaways

Despite price target increases, the use of ratings such as Equal Weight shows that some analysts still see a balanced risk and reward profile rather than a clearly attractive opportunity.
The revised targets, while higher, remain close enough to typical trading ranges that they may imply only limited headroom if execution or sector conditions do not line up with current assumptions.
Analysts keeping more neutral stances are signaling that uncertainties around earnings durability, margins or cash generation could cap how much investors are willing to pay in terms of P/E.
For investors, this mix of higher targets and cautious ratings underlines that expectations are being fine tuned, and that setbacks on execution or sentiment could quickly compress the implied fair value range.

What's in the News

Forvia has confirmed it has started a divestment process for parts of its portfolio, including its interiors business group, following earlier media reports about a potential sale of this unit. (Key Developments)
The group reiterated that it cannot comment on market rumours or disclose information on any confidential offers, including valuations or pricing of assets that might be involved. (Key Developments)
Management stated it is carrying out a comprehensive review of its portfolio, without detailing which assets are in scope or what timeline it is working to for potential transactions. (Key Developments)
According to a Reuters report referenced in the company’s statement, Forvia is seeking to sell part of its car interiors business as part of efforts to narrow its portfolio and lower its debt. (Key Developments)

Valuation Changes

Fair Value Estimate was raised from €13.78 to €15.23, representing a moderate uplift in the central valuation marker used in the model.
The Discount Rate was nudged up from 12.1% to 12.3%, indicating a slightly higher required return underpinning the valuation work.
Revenue Growth shifted from an assumed 1.08% increase to a 2.67% decline, reflecting a move to more cautious top line expectations in the model.
The Net Profit Margin was trimmed from 2.63% to 2.54%, a small reduction in expected profitability levels.
The Future P/E was raised from 5.17x to 6.16x, pointing to a higher assumed earnings multiple applied to Forvia in the updated analysis.

Expansion into advanced electronics and key global markets supports higher market share and improved margins as auto tech trends accelerate.
Portfolio streamlining and efficiency measures strengthen earnings quality, boost cash flow, and enhance returns through optimized operations and deleveraging.
Elevated transformation costs, reliance on asset sales, exposure to China, slow hydrogen adoption, and currency headwinds threaten profitability, revenue growth, and balance sheet stability.

Catalysts

About Forvia

Manufactures and sells automotive technology solutions in France, Germany, other European countries, the Americas, Asia, and internationally.What are the underlying business or industry changes driving this perspective?

Robust order intake and commercial success in advanced electronics (zone controllers, battery management, radar) and interiors from both Chinese and Western OEMs position Forvia to capture higher market share as the automotive industry accelerates toward EVs and increasingly connected vehicles, supporting multi-year revenue growth.
Regional expansion and manufacturing localization-especially in China, India, and Korea-enhances access to fast-growing markets and leverages local innovations tailored to consumer demand for smart mobility, boosting future sales and improving operating margins.
Ongoing cost rationalization and Project Simplify, with targeted SG&A and process automation initiatives, are expected to drive an additional €110 million in annual savings by 2028, sustaining improvements in net margins and free cash flow.
Strategic divestitures and portfolio optimization focused on core high-growth technologies are underway, with sizable asset disposals planned to accelerate deleveraging, reduce interest burden, and improve earnings stability.
The quality of Forvia's new order backlog, with rising profitability and declining upfront costs, combined with continuing realization of Hella synergies, is set to enhance operating leverage and drive structurally higher returns on capital over the medium term.

Forvia Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Forvia's revenue will grow by 1.1% annually over the next 3 years.
Analysts assume that profit margins will increase from -1.7% today to 2.6% in 3 years time.
Analysts expect earnings to reach €731.6 million (and earnings per share of €2.16) by about September 2028, up from €-458.7 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 5.2x on those 2028 earnings, up from -4.8x today. This future PE is lower than the current PE for the GB Auto Components industry at 11.7x.
Analysts expect the number of shares outstanding to decline by 0.15% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 12.1%, as per the Simply Wall St company report.

Forvia Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

High restructuring and transformation costs-including €150 million tied to Project Simplify and continued restructuring expenses for EU-FORWARD and North America-pose a risk to medium-term net income and free cash flow, especially as major portions of savings and synergies may not be fully realized until 2028.
Dependence on successful sizable asset disposals creates uncertainty; delays or unfavorable market conditions could hinder achievement of leverage targets (1.5x in 2026), impacting investor sentiment, balance sheet strength, and increasing refinancing risk.
Exposure to China as the first country for sales brings risk from potential trade barriers, heightened geopolitical tension, local overcapacity, and an ongoing automotive price war, all of which could depress revenues, margins, and market share in a highly volatile environment.
Slow adoption and declining investment in hydrogen technologies, highlighted by the loss of Stellantis as a major customer (80% of expected SYMBIO JV volumes), reveal vulnerability to disruptive technological shifts and changing customer strategies, undermining previously anticipated revenue streams and asset values.
Currency headwinds-including euro strength against the US dollar and Chinese yuan-have already reduced reported sales and are expected to cut at least €500 million from H2 revenues; sustained forex volatility will continue to pressure top-line growth and operating margins, especially given the global revenue footprint.

Valuation

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

The analysts have a consensus price target of €13.781 for Forvia 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 €39.0, and the most bearish reporting a price target of just €8.5.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €27.8 billion, earnings will come to €731.6 million, and it would be trading on a PE ratio of 5.2x, assuming you use a discount rate of 12.1%.
Given the current share price of €11.12, the analyst price target of €13.78 is 19.3% 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 Forvia?

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.

Regional Localization And Advanced Electronics Will Capture Emerging EV Markets