Strong Services and Lower Valuation
Building on these strengths, Barclays upgraded GEA shares from “Equal Weight” to “Overweight” and raised its price target from €70 to €78. Aftermarket services and spare parts are a key pillar of the company’s business stability, accounting for as much as 40% of total revenue, well above the sector average of 30%. Despite this, GEA trades at an enterprise value of approximately 13 times its estimated adjusted operating profit, or EBIT, for 2027, compared with a sector average of 15 times. According to the analysts, the market has yet to fully recognise the tangible results of the company’s restructuring and efficiency improvements.
GEA Group Stock Price Performance Over the Past Five Years [EUR]
(Source: Deutsche Börse)
Customer Investment Supports Orders
Alongside its successful internal transformation, developments in GEA’s end markets also play a crucial role. According to Barclays, customers’ capital expenditure is more important to future order growth than the pace of their production. The outlook for this investment in 2027 remains clearly positive, creating favourable conditions for new orders. The bank does not expect overall volumes in the food and beverage industry to hold back GEA’s business. It sees a much closer relationship between the company’s revenue and the dairy industry, which also benefits from sustained consumer interest in protein-rich foods.
Margins Outpace Long-Term Ambitions
The company’s profitability is improving alongside rising customer investment. The midpoint of its updated adjusted EBITDA margin guidance for 2026 has reached 17.2%, already exceeding the lower end of the 17–19% target range originally set for 2030. Barclays therefore sees a strong likelihood that GEA will revise its long-term targets upwards in the near future. For 2028, the bank forecasts a margin of 18.2%, which is 0.3 percentage points above market consensus. It also expects adjusted earnings per share to rise from €3.31 in 2026 to €4.09 in 2028, with both estimates exceeding market expectations.
Shares Rise Beyond the AI Boom
These strong financial results are also reflected in the stock market. GEA shares have risen approximately 58% over the past five years, demonstrating that traditional industrial companies outside the main AI boom can also deliver solid gains. Barclays considers the valuation attractive even after this performance, particularly given the high share of services in revenue and improving profitability. Further upside, however, will depend largely on how successfully the company meets growth expectations for orders and margins.
A Solid Foundation for Further Growth
GEA enters the coming period well positioned for continued growth. Its strong service business, improving profitability and anticipated customer investments create room for further business expansion. If these expectations translate into new orders and financial results, they could support both an upward revision of long-term targets and a higher valuation for its shares. Although macroeconomic and operational risks remain part of the outlook, Barclays’ assessment suggests that GEA is well placed to build on its achievements.
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