Last Update 19 Apr 26

Fair value Increased 0.30%

SAAB B: Higher P/E And Mixed Ratings Will Shape Fairly Valued Outlook

Narrative Update

The updated fair value estimate for Saab moves slightly higher to SEK 604.91 from SEK 603.09. This reflects analysts' recent SEK 20 increases to SEK 540 and SEK 516 price targets that are tied to revised revenue growth, profit margin, and future P/E assumptions.

Analyst Commentary

Recent Street research on Saab points to higher price targets clustered in the SEK 516 to SEK 540 range, with some targets lifted by SEK 20 to SEK 40. Even with these higher levels, ratings such as Underweight and Sell show that not all analysts see the current share price as fully justified relative to their risk and return expectations.

Bullish Takeaways

Bullish analysts lifting targets toward SEK 540 indicate more confidence that Saab can support a higher fair value than previously assumed, which feeds into the slight increase in the updated SEK 604.91 fair value estimate.
The move from a SEK 374 target to SEK 516 suggests that some analysts see room for Saab to execute better than they had built into earlier models, particularly around revenue growth and margins.
Incremental SEK 20 to SEK 40 target increases point to a view that Saab's earnings power and justified P/E multiple may be higher than prior expectations, even among more cautious research houses.
The clustering of targets above SEK 500 supports the idea that, under analysts' revised assumptions, Saab can sustain a valuation that is meaningfully higher than where earlier models were anchored.

Bearish Takeaways

Despite higher targets, the use of Underweight and Sell ratings signals that some bearish analysts still see a mismatch between Saab's share price and their estimate of risk adjusted value.
The decision to keep negative ratings while lifting targets suggests that these analysts acknowledge improved fundamentals in their models, but still regard execution risks or valuation as constraints.
Targets such as SEK 516 and SEK 540, paired with cautious ratings, imply concern that a higher P/E assumption or stronger margin outlook may already be reflected in the market price, limiting upside in their view.
For readers, the combination of raised targets but bearish ratings is a reminder that not all research is aligned on Saab's ability to deliver against the more optimistic revenue and profit assumptions embedded in updated models.

What's in the News

Saab received an order of about SEK 2.6b from the Swedish Defence Materiel Administration for a mobile, modular counter unmanned aerial system designed to protect Swedish Armed Forces and civil infrastructure, with deliveries planned for 2027 to 2028 (Client Announcements).
The Annual General Meeting on 1 April 2026 decided on a dividend of SEK 2.40 per share, to be paid in two SEK 1.20 instalments with record dates on 7 April 2026 and 6 October 2026 and payments expected on 10 April 2026 and 9 October 2026 (Dividend Increases).
Saab signed a Memorandum of Understanding with Canadian AI firm Cohere to work on artificial intelligence technologies for GlobalEye, covering areas such as data driven mission support, maintenance tools and information processing in secure aerospace settings, with initial pilot projects already identified (Strategic Alliances).
The company is consolidating its naval operations into a new business area called Naval, combining business area Kockums and most of the Naval Combat Systems unit under one organisation from 1 April 2026, led by Mats Wicksell (Business Reorganizations).
Saab expanded cooperation with Poland's defence industry through new agreements with Polska Grupa Zbrojeniowa on in country submarine maintenance, repair and overhaul under Poland's Orka programme, and with WB Group on autonomous naval systems and unmanned aerial systems Gladius and Future Task Force (Strategic Alliances).

Valuation Changes

Fair Value: SEK 603.09 to SEK 604.91, a slightly higher assessed level.
Discount Rate: 5.74% to 5.83%, a modestly higher required return in the model.
Revenue Growth: 19.37% to 19.77%, a small adjustment to expected top line expansion in SEK terms.
Net Profit Margin: 8.56% to 8.47%, a slight reduction in projected earnings margin on SEK revenues.
Future P/E: 33.55x to 33.74x, a marginally higher valuation multiple applied to Saab's earnings.

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Key Takeaways

Saab is set to benefit from increasing global defense spending and prioritization of European self-reliance, supporting sustained demand and reduced revenue volatility.
Focus on advanced technologies, sustainability, and expanding service offerings should drive high-margin growth, recurring revenues, and contract differentiation.
Saab faces revenue and margin risks from reliance on government contracts, heavy upfront investments, tightening export controls, rising competition, and escalating digitalization costs.

Catalysts

About Saab

Provides products, services, and solutions for military defense, aviation, and civil security markets Internationally.What are the underlying business or industry changes driving this perspective?

The significant ramp-up in global defense spending, especially following the recent NATO commitment for member states to target 5% of GDP by 2030-2035, directly supports sustained demand for Saab's advanced defense solutions. Saab's strong backlog (~SEK 200 billion) and rising book-to-bill ratio position it to benefit from this long-duration trend, likely driving outsized topline growth over the next several years.
Heightened adoption of AI, autonomous platforms, and digital warfare technologies is accelerating investment requirements from governments globally. Saab's committed R&D in emerging technologies (e.g., AI-enabled Gripen fighters, collaboration with General Atomics on drones, automated manufacturing) should increase its share in high-margin, next-generation contracts, boosting future earnings and improving net margins.
Increasing need for European defense sovereignty and industrial self-reliance positions Saab as a preferred supplier, potentially capturing incremental share of refocused European defense budgets and benefiting from multi-year mega contracts-this geographical diversification and preference for local vendors may reduce revenue cyclicality and mitigate single-country political risks.
Saab's investments in sustainable technologies (e.g., Net Zero targets, capability to operate aircraft on sustainable fuels) cater to intensifying regulatory and governmental procurement trends toward green defense solutions. This could enable Saab to win orders over less-adapted peers, supporting both revenue expansion and margin resilience as sustainability becomes a contract differentiator.
Ongoing expansion in lifecycle services, support and digital contracts (e.g., maintenance, cybersecurity, training via Combitech) is increasing recurring/annuity revenue-a trend that enhances earnings predictability, reduces volatility tied to large equipment sales, and contributes to stable, higher net margins over time.

Saab Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Saab's revenue will grow by 19.8% annually over the next 3 years.
Analysts assume that profit margins will increase from 8.0% today to 8.5% in 3 years time.
Analysts expect earnings to reach SEK 11.5 billion (and earnings per share of SEK 22.01) by about April 2029, up from SEK 6.3 billion today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 33.8x on those 2029 earnings, down from 50.7x today. This future PE is lower than the current PE for the GB Aerospace & Defense industry at 54.3x.
Analysts expect the number of shares outstanding to grow by 0.32% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 5.83%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

Saab's heavy dependence on government contracts-particularly from Sweden and a small number of key export markets-exposes it to political decision-making, budget cycles, and potential shifts in defense spending priorities, which could introduce volatility or sudden declines in future revenues.
Requirement for sustained, front-loaded investments in capacity expansion (factories in India, U.S., and Sweden) and advanced R&D (especially for AI, autonomous systems, and digitalization) heightens the risk of margin pressure and negative free cash flow if order intake does not keep pace with cost escalations, potentially impacting net earnings and financial flexibility.
Rising global scrutiny on arms exports and potential tightening of export controls from entities like the EU or UN could restrict Saab's access to critical international markets, particularly as more than half of recent order intake is domestic, which may ultimately limit revenue growth and diversification over the long term.
Intensifying competition from both established global defense firms and new entrants leveraging digital and AI-based defense solutions could erode Saab's market share, compress margins, and force higher ongoing R&D expenditure to remain competitive, with the risk that customers may not pay sufficiently higher prices to cover these investments, impacting long-term profitability.
Ongoing and increasing investment in digitalization, IT security, and automation-while necessary-may lead to higher corporate costs and lower gross margins in the near future, and exposes Saab to the risk of execution delays or cost overruns (noted in sectors like underwater/autonomous vehicles and Aeronautics), potentially resulting in impaired earnings and delayed profitability realization.

Valuation

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

The analysts have a consensus price target of SEK604.91 for Saab 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 SEK780.0, and the most bearish reporting a price target of just SEK490.0.
In order for you to agree with the analysts, you'd need to believe that by 2029, revenues will be SEK136.0 billion, earnings will come to SEK11.5 billion, and it would be trading on a PE ratio of 33.8x, assuming you use a discount rate of 5.8%.
Given the current share price of SEK595.6, the analyst price target of SEK604.91 is 1.5% 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.

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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.

SAAB B: Defense Demand And AI Investments Will Shape Future Opportunities And Risks