J.P. Morgan has revised its view on Aker Solutions (OL:AKAST), lifting the stock to a "neutral" rating from "underweight" and assigning a December 2027 price target of Nkr45, up from a previously noted Nkr48 target for the same date. The change follows the Norwegian engineering group’s first-quarter update, which the bank said showed improving commercial momentum and a more transparent backlog.
The broker set its blended December-2027 valuation equally across three methods - 2027 P/E, EV/EBITDA and a discounted cash flow - producing a target of Nkr45 per share. The approach applies a 10x forward P/E multiple and a 4.5x EV/EBITDA multiple to 2027 estimates, and a DCF using a 10% WACC and a 1% long-term growth rate.
At the time of the note Aker Solutions shares were trading at Nkr44.98, representing a 45.5% gain year-to-date and a 53.2% rise over the prior 12 months.
J.P. Morgan explained the rating adjustment by saying: "The risk/reward has become more balanced in our view, with improving commercial momentum, stronger backlog visibility, and a more supportive medium-term earnings trajectory reducing the downside case that had previously underpinned our rating," the note said.
Management maintained full-year EBITDA margin guidance, excluding OneSubsea, at 7%-7.5%, and indicated that certain legacy projects are expected to complete in the second half of 2026. Those projects, the company reported, contributed revenue in the first quarter "without any margin recognition."
J.P. Morgan highlighted an improvement in Life Cycle margins, which rose 50 basis points year-on-year to 7.2% in 1Q26. The bank’s modelling sees full-year 2026 adjusted EBITDA at Nkr4,699 million on expected revenue of Nkr52,484 million, implying an EBITDA margin of 9.0% for the year.
Order activity and the tender pipeline were central to the update. Aker Solutions reported that its tender pipeline expanded 10% quarter-on-quarter to NOK90 billion in 1Q26, a move driven mainly by Asia-Pacific and Australia. The composition of the pipeline shifted markedly: Europe’s share fell from roughly 93% in 4Q25 to about 45% in 1Q26, while APAC’s share increased to 48%.
J.P. Morgan noted an approximately tenfold rise in APAC tendering compared with the fourth quarter. Order intake for the quarter reached NOK28.81 billion, lifting total backlog to NOK80.19 billion and producing a book-to-bill ratio of 2.17x. Within that, Life Cycle order intake was NOK23 billion in the quarter, an amount the bank says represented roughly 35% of group orders for full-year 2025.
On the OneSubsea joint venture, Aker Solutions received a 1Q dividend of NOK137 million, compared with NOK841 million for full-year 2025 which included an extraordinary payment. OneSubsea revenues fell 8% year-on-year in the quarter, with margins at 16.8% versus 20.4% in 1Q25. J.P. Morgan expects the JV’s net income contribution to the group to reach NOK845 million for full-year 2026.
Despite the positive commercial signals, J.P. Morgan flagged valuation and execution as areas of concern. The bank pointed out that forward valuation multiples are near three-year highs: the adjusted P/E is 8.4x for 2026 and 11.6x for 2027. It identified lofty multiples, potential execution delays and the risk of higher-than-expected project costs as key downside risks.
Contextual notes
- Valuation approach combines P/E, EV/EBITDA and DCF to produce the Dec-2027 target.
- APAC tendering drove a notable shift in geographic composition of the company’s pipeline.
- OneSubsea remains a material but variable contributor to group cash flow and margins.