JPMorgan upgraded Rockwool to Overweight on Monday, saying a protracted bear case linked to the company’s Russia exposure has largely been resolved and that the stock now presents attractive value after a difficult stretch for earnings and investor sentiment.
Price target and market reaction
Analyst Zaim Beekawa assigned a December 2027 price target of 250 Danish krone, which represents about 18% upside from the level where the stock last closed. Rockwool shares responded in Copenhagen trading, climbing by more than 2%.
What drove the downgrade and recent weakness
The stock underwent a roughly 10% decline in 2025 after management issued several guidance downgrades that JPMorgan links to weaker market conditions, particularly in North America and Russia, along with a number of one-off costs that reduced reported profits. The negative trend extended into early 2026 after Russia assumed control of Rockwool’s local assets earlier this month, applying further downward pressure to the share price.
JPMorgan’s view on the Russia development
Beekawa characterises the latest Russia development as a turning point. "We view the aforementioned Russia issue as a clearing event with a key bear argument now played out," he said. Excluding the Russian exposure from JPMorgan’s revised 2026 estimates, Rockwool is said to trade at 7.9 times EV/EBITDA - a near 24% discount to the Lightside sub-sector, according to the analyst.
With Russian operations taken out of the picture, JPMorgan expects reduced earnings volatility and a renewed emphasis on Rockwool’s core stone wool insulation business. The analyst sees continued market-share gains for stone wool products, supported by rising penetration of non-combustible materials across construction markets.
Outlook, guidance and cost considerations
Looking toward forthcoming results, Beekawa anticipates management will adopt a cautious tone after a year of volatile earnings. He expects company guidance for 2026 to point to "EBIT margins in the range of 12-13%." JPMorgan’s own forecasts sit about at the midpoint of that range and currently do not assume a full reversal of roughly c30 million in one-off costs recorded last year.
The analyst also highlighted that capital expenditure is expected to increase as investment ramps up, with capex likely to exceed 10% of sales over the next two to three years. Higher investment could raise questions about the continuation of the companys share buyback programme, though Beekawa noted that leverage remains low and he still sees the potential for Rockwool to sustain shareholder returns during a heavier investment phase.
Implications
JPMorgans upgrade reflects a view that the most acute bear-case argument has been addressed and that valuation now looks compelling relative to peers in the Lightside sub-sector. At the same time, the bank expects prudent management communication and acknowledges ongoing cost and investment dynamics that will shape near-term performance.
Key upcoming items to watch
- Company results and management guidance for 2026, particularly any confirmation of expected EBIT margin range.
- Progress and timing of increased capital expenditure and its impact on cash flow and shareholder returns.
- Any further developments related to the companys former Russian assets and their accounting or financial effects.