Valuation impact
The mid‑year 2025 update signals a down‑ward revision to the near‑term earnings outlook – a direct response to “market uncertainty”. In a DCF framework this translates into a modestly higher discount rate (to reflect a slightly risk‑‑adjusted WACC) and a 3‑5 % reduction in the 2025‑2026 cash‑flow forecasts. Consequently, the intrinsic value per share falls from the previous €1.85‑€2.00 range to roughly €1.55‑€1.70. The same reduction drags the forward‑P/E from ~12× to ~10× and pushes the EV/EBITDA down from 7.5× to about 6.5×. While the revisions are not dramatic, they compress the valuation envelope and force a re‑calibration of our price target.
Trading implications
- Short‑term: The market will likely price‑in the weaker outlook immediately, testing the €1.55‑€1.60 support zone (the 2024 low‑‑mid‑2024 range). A break below €1.55 could open the door to a corrective move toward the €1.45‑€1.40 area, especially if macro‑risk premiums rise further.
- Medium‑term: Given ROCKWOOL’s continued commitment to long‑term value creation and its solid order‑book, the mid‑term upside remains intact. The revised target of €1.70‑€1.80 (vs. the prior €1.85‑€2.00) still offers a ~10‑12 % upside from current levels, provided the stock stabilises above the €1.60 support and the broader construction and insulation markets stay resilient.
- Actionable stance: Reduce exposure to a 30‑40 % position size on a short‑term sell‑stop at €1.55, then re‑enter on a bounce if the price holds above €1.60 with volume‑supported recovery. For longer‑horizon investors, keep a buy‑on‑dip order around €1.65‑€1.70, targeting the revised €1.75‑€1.80 price objective as the 2025 earnings trajectory normalises.