BofA Global Research lowered its recommendation on Electrolux AB to "underperform," a move that coincided with a steep drop in the company's stock price. The Swedish appliance maker's shares were trading at 62.82 SEK when the brokerage cut its rating from "buy" and set a new price objective of 50 SEK. The announcement sent the share price down by more than 7% on the day.
The downgrade stems from what BofA describes as a confluence of weak demand and mounting cost pressures. Analysts at the brokerage now expect Electrolux to face EBIT headwinds of 1 billion SEK in 2026 and 2 billion SEK in 2027. As a result, BofA has reduced its group earnings estimates for those years by between 16% and 26%.
Key to the reassessment are sharp increases in logistics and raw-material expenses. Logistics costs represented 8.6% of sales in fiscal 2025, the report notes, and freight rates have risen roughly 30% following conflict in the Middle East. BofA calculates that if these elevated freight rates persist, Electrolux could face an annual EBIT shortfall of about 4 billion SEK.
Raw-material inflation is also a central concern. BofA reports year-on-year price increases across a range of inputs in the 10% to 30% band. Plastics, in particular, have risen by approximately 30%, which the brokerage estimates would translate into a 1.3 billion SEK hit to EBIT. Additional upward movement in the prices of steel, copper and aluminum has compoundingly pressured margins and hampered the company’s ability to achieve volume growth.
Reflecting the scale of the cost surge, BofA said it has adjusted its valuation methodology for Electrolux. The new 50 SEK price objective implies the stock would trade at roughly a 30% discount versus its historical average valuation, equating to about 6x EV/EBITDA for fiscal 2027 under the bank’s framework.
The report acknowledged that Electrolux has implemented internal measures to offset some of the cost increases, but concluded that the external environment has become materially more challenging than previously anticipated. "Demand remains weak, but cost pressure mounting," the analysts wrote, highlighting the increased likelihood of further earnings downgrades if adverse cost trends continue.
Investors and market participants will be watching how persistent elevated freight rates and continued raw-material inflation affect Electrolux’s margin recovery and earnings trajectory over the next two years. For now, the combination of softer demand and rising input costs has prompted a notable reassessment of the company’s near-term prospects by a major brokerage.