Goldman Sachs moved Wartsila's recommendation to Neutral from Sell on Thursday while lifting its 12-month price target to €34 from €26.30 - an increase of roughly 30% - after revising its adjusted EBIT estimates for fiscal 2026 through 2029 higher by 12-18%.
The bank's report noted the shares were trading at €35.44 at the time, implying about a 4.1% downside relative to the new target.
At the centre of Goldman Sachs' reassessment are Wartsila's recently announced capacity investments. The company disclosed a roughly €90 million plan to expand technical production capacity by 30% by the first quarter of 2029. That new commitment is additive to a prior roughly €140 million investment, announced in February 2026, which is expected to lift capacity by 35% by the first quarter of 2028. Taken together, the two projects represent a planned increase in technical production capacity of 65% above 2025 levels.
Management has said the Vaasa factory in Finland will be capable of producing 120% more gigawatts in 2029 once the expansion programme is fully commissioned compared with 2025 operational levels, and that the factory operated at full capacity in 2025.
Goldman Sachs said it anticipates that the incremental capacity will be absorbed, pointing to strong demand in power generation and to full backlogs at alternative technology providers, including turbine manufacturers, through the end of the decade.
On an equipment sales basis, the broker's 2029 forecast for Wartsila's Energy and Marine divisions is 2.6 times the 2025 level. Goldman breaks that multiple down as 2.2 times driven by utilisation of the expanded capacity and a further 0.4 times attributable to expected price increases as datacenter backlogs are delivered and the supply-demand balance remains tight through 2029.
Goldman Sachs set group revenue projections at €6.70 billion in 2026, €7.62 billion in 2027 and €9.06 billion in 2028. Adjusted EBIT is forecast to climb from €1.01 billion in 2026 to €1.19 billion in 2027 and €1.37 billion in 2028.
The bank highlighted that its adjusted EBIT estimates are above Visible Alpha consensus by 11% for 2026 and by 16% for 2027.
On an earnings-per-share basis, Goldman Sachs now expects €1.32 in 2026, €1.54 in 2027 and €1.78 in 2028, versus its prior forecasts of €1.18, €1.36 and €1.65 respectively. Using the 2026 estimate, the shares trade at a forward price-to-earnings multiple of 26.8 times.
Goldman described the stock as fairly valued, noting it trades in line with the sector average price-to-earnings growth ratio and is marginally below the sector on free cash flow yield.
The €34 price target is derived from a 24-month forward enterprise value to invested capital framework, applied against a return on invested capital to weighted average cost of capital methodology. Under Goldman Sachs' modelling, the implied return on invested capital is 70.4% in 2026, rising to 85.9% in 2027 and to 139.9% in 2028.
Goldman Sachs also outlined how its view has shifted relative to its prior Sell thesis. The bank had previously been cautious because of concerns that Marine capital expenditure might ease after a period of strong orders following 2020. The updated view recognises a robust Energy order backlog and the potential for Marine capital expenditure growth should oil and gas markets recover, which the bank sees as limiting downside risk to consensus forecasts.
On order intake, Goldman Sachs is forecasting group levels that are 6% ahead of Visible Alpha consensus in 2027 and 14% ahead in 2028.
The broker listed key upside scenarios including better-than-expected pricing for new Energy orders, stronger Storage demand driven by datacenter-related backlog delivery, and additional cash distributions to shareholders. Downside scenarios it flagged include weaker-than-expected Energy pricing, slower Storage growth, the imposition of further U.S. tariffs, and contract execution problems.
Overall, Goldman Sachs' upgrade reflects an expectation that significant factory expansions and price environment dynamics will support materially higher equipment sales and earnings by the late 2020s, while the shares trade at valuations the bank views as consistent with peers.