EQT: Planned US IPO And Capital Moves Will Unleash New Upside

Key Takeaways

• Global expansion and diversification, particularly in Asia and the U.S., position the firm for strong growth in assets and earnings from rising private capital allocations.
  
• Scaling new investment vehicles and digital initiatives is set to drive recurring fee income, margin expansion, and sustained profitability even in volatile markets.
  
• Plateauing fund growth, operational challenges, and dependence on favorable markets and expansion heighten risks to earnings, margins, and projected global growth.

Catalysts

A global private equity & venture capital firm specializing in private capital and real asset segments.

• EQT is positioned to capture substantial long-term growth from the ongoing expansion of private capital allocations by both institutional and private wealth clients globally-secular shifts that are expected to drive significant step-ups in fundraising volumes and recurring management fee revenues over the coming years.
  
• The firm's global diversification, especially its push into fast-growing Asian markets (e.g., India, Japan) and the U.S., positions it to benefit as more capital is funneled into private assets in these regions, supporting sustained AUM growth and higher future earnings.
  
• The development and scaling of evergreen vehicles and private wealth offerings-including potential access to U.S. 401(k) retirement plan flows-create new, high-momentum revenue streams and enhance visibility for long-term fee income growth.
  
• Ongoing initiatives to simplify and streamline the operating model, invest in digital/AI capabilities, and integrate functions are expected to drive long-term margin expansion and improve net profitability by keeping operating expenses in check as the platform scales.
  
• EQT's proven ability to monetize investments at strong multiples-even in a volatile exit environment-supports robust carried interest and investment income prospects, underlining its ability to deliver performance fees and drive higher overall earnings as more funds enter realization mode.

EQT Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming EQT's revenue will grow by 14.2% annually over the next 3 years.
• Analysts assume that profit margins will increase from 31.2% today to 46.9% in 3 years time.
• Analysts expect earnings to reach €1.9 billion (and earnings per share of €1.59) by about September 2028, up from €840.3 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting €2.5 billion in earnings, and the most bearish expecting €1.5 billion.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 24.5x on those 2028 earnings, down from 42.5x today. This future PE is greater than the current PE for the SE Capital Markets industry at 24.1x.
• Analysts expect the number of shares outstanding to decline by 0.52% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.18%, as per the Simply Wall St company report.

EQT Future Earnings Per Share Growth

Risks

• Slower fundraising growth and potential "glass ceiling" for flagship fund sizes (e.g., limited step-up between EQT X and XI) may become structural, reflecting tougher capital-raising environments and increased competition, which could curb long-term revenue expansion and management fee growth.
  
• Increased complexity, integration risks, and organizational changes (e.g., leadership reshuffles, combining teams, and reducing headcount) might result in near-term execution challenges, disrupting client service and innovation, with potential negative impacts on earnings and margins if not managed successfully.
  
• Heavy reliance on continued supportive capital market conditions for exits and strong returns introduces vulnerability; any prolonged downturn, liquidity freeze, or valuation compression would slow realization activity and carried interest generation, impacting both revenue and profitability.
  
• Growing dependence on expanding into Asia and the U.S. (notably, outsized growth expectations in India and new private wealth products) exposes EQT to changing regulatory regimes, new market competition, and macro/geopolitical risks, which could destabilize projected growth and earnings if secular headwinds intensify or market conditions change.
  
• Increased exposure to currency fluctuations (notably, significant USD/EUR FX risk) without hedges could pressure margins and reported earnings, especially if a stronger euro persists or U.S.-denominated revenue growth underperforms while cost bases remain Euro-centric.

Valuation

• The analysts have a consensus price target of SEK366.923 for EQT 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 SEK405.55, and the most bearish reporting a price target of just SEK316.53.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €4.0 billion, earnings will come to €1.9 billion, and it would be trading on a PE ratio of 24.5x, assuming you use a discount rate of 6.2%.
• Given the current share price of SEK334.3, the analyst price target of SEK366.92 is 8.9% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
• 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.