Positive Long-Term Outlook for VAT Group AG Despite Recent Underperformance

In a report released today, Daniela Costa from Goldman Sachs upgraded VAT Group AG to a Buy, with a price target of CHF308.00.

Daniela Costa’s rating is based on the assessment that VAT Group AG presents an attractive investment opportunity despite recent underperformance. The stock has been the worst performer in its coverage, largely due to delays in the anticipated recovery of semiconductor capital expenditures and concerns over geopolitical factors like China overstocking and US tariffs. However, Costa believes that the current stock price has already accounted for these challenges, and the risk-reward profile is now favorable.
Costa anticipates long-term growth in semiconductor capital expenditures, projecting a 15% compound annual growth rate from fiscal year 2024 to 2028. Even if VAT Group’s sales in China were to decrease significantly, the potential downside is limited compared to the upside in a bullish scenario. Additionally, adjustments in forecasts reflect a decrease in the Valves segment’s EBITDA due to currency and tariff impacts, but an increase in the Global Services segment due to improved utilization rates. Overall, Costa’s price target for VAT Group has been raised, reflecting a positive outlook on future earnings and sector-relative performance.