Signify NV: Deteriorating Fundamentals, Weaker Margins, and Justified Valuation Discount Support Sell Rating

In a report released today, Max Yates from Morgan Stanley maintained a Sell rating on Signify NV, with a price target of €18.00.

Max Yates has given his Sell rating due to a combination of factors that highlight weakening fundamentals and limited valuation support for Signify NV. The company’s fourth-quarter 2025 performance showed a clear deterioration, with organic growth slowing further and EBITA coming in significantly below market expectations. Management’s 2026 margin outlook is also meaningfully weaker than consensus, implying substantial downward revisions to future profit estimates. On top of this, the business faces ongoing headwinds from softer consumer demand (notably in China), persistent pricing pressure across OEM and trade channels, and cost-of-goods inefficiencies in certain segments.
Even though Signify is launching another large cost-reduction program, prior rounds of restructuring have not prevented continued pressure on margins, which undermines confidence in the turnaround potential. At the current share price and using the mid-point of the new margin guidance, the stock trades at a notable discount to the broader capital goods sector, but Yates believes this discount is justified and likely to widen given the structural challenges and competitive pressures. In his view, the latest results constitute a material negative surprise, support expectations of a double-digit share price decline, and reinforce the case for maintaining a bearish stance on the shares.